KARACHI: The third quarter of this fiscal year witnessed a current account surplus of $961 million, thus slashing the overall deficit to $1.456 billion during the first nine months of 2014-15, the State Bank reported on Friday.

The current account deficit was $2.692bn in the same period of last year.

The deficit massively declined in this period, but it still exists despite over $13 billion remittances sent by overseas Pakistanis reflecting that external front of the economy has not been managed to benefit from large amount of remittances.

In March, the current account was surplus with $163m while in February the account was surplus with the $872m which collectively kept the third quarter surplus indicating a positive trend.

If the next three months remain surplus, this fiscal year could end up with no deficit.

The fiscal years of 2013 and 2014 ended with deficits of $2.496bn and $3.130bn, respectively.

The government has been facing serious criticism over mismanagement on external fronts, particularly in the wake of increasing remittances and persistent current account deficit.

Details showed that the trade gap was entirely met by the remittances which rose to $13.328bn in this period while the current account deficit remained there requiring more to meet the deficit.

The exporters failed to increase export proceeds as it fell by $624m to $18.122bn during the nine months causing an increase in the trade gap by $12.753bn.

The imports also fell but it was declined by just $351m.

Experts said the country has no threat of default-like situation due to low current account deficit, but it is threatening in the light of high remittances and foreign exchange reserves of over $16bn.

In the wake of over $13.3bn inflow of remittances, the presence of deficit means the huge inflows are not being utilised for the benefit of the economy. On the other hand, any shock that reduces the remittances could break the backbone of economy.

It was also noted that the trade gap was even higher than last year despite massive cut in the oil prices. The oil import makes the largest bill in the list of imported items.

Analysts said the ongoing conflicts in the Gulf countries could bring change in the situation for Pakistanis working in these countries but it seems the government has not taken any preventive step to face the possible shock in terms of low remittances.

Published in Dawn, April 18th, 2015

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