KARACHI, Sept 18: The current account for the month of August recorded surplus with $1.240 billion providing significant relief to the government facing fast melting foreign exchange reserves and poor inflows of foreign investment.
While the balance of trade (goods) did not improve much during the first two months of the current fiscal, export of services did a better job to offset the impact of imbalance in trade of goods.
The State Bank reported on Tuesday the current account for the first two months, July-August, was surplus with $919 million against a deficit of $261 million during the same period of last year.
The current account deficit of the last year, FY-12 was $4.634 billion and this was against a surplus of $214 million of the preceding year.
It seems that the trend has changed for the current fiscal yea despite prevailing problems like poor foreign inflows and higher outflows for repayment of debts that existed last year.
The first month, July, posted a deficit of $321 million but the huge surplus for single month of August changed the situation that may help keep the current account positive for the next few months.
The real change that boosted the surplus was export of services which sharply increased during the first two months.
According to detail, services exports rose to $1.808 billion compared to just $771 million during the same period of previous year.
Another positive element was the lower import of services which helped increase balance of services trade in favour of Pakistan.
Import of services fell to $1150 million during the first two months against $1208 million of the previous year.
The balance of goods and services posted deficit during the two months but a big difference was there in terms of volume of deficit. This deficit was of $1.752 billion during the first two months compared to a deficit of $2.965 billion recorded during the same period of last year.
In the wake of falling foreign exchange reserves, the surplus would help the country improve its reserves position, particularly with the help of remittances being sent by the overseas Pakistanis who contributed $13bn in FY12.
Concerns are high among analysts that repayments of debt services to IMF would damage external account position of the country. However, restoration of NATO supplies could help the country reduce its deficit.