KARACHI: The current account of the country appeared surplus in August while July-August combined deficit remained just 20 per cent of what it was a year ago.

This highly encouraging situation which is an indicator of economic improvement showed that the current account in August was surplus by $82 million.

The surplus was a complete changed situation as in July the country recorded a deficit of $606 million.

However, more encouraging was the July-August combined deficit stood at $527 million against the massive $2.68 billion during the same period last year.

The two months deficit was just 20 per cent of the deficits of corresponding period last year.

The main reason for improvement was the narrowing of trade deficit while the remittances being sent by overseas Pakistanis were the real key element of minimising the role of current account deficit in the economy.

Analysts said falling current account deficit would help the economy to improve while it would bring stability in the exchange rate.

The local currency was the victim of poor economy and balance of payments crisis which forced it to shed 23 per cent against US dollar in 2008.

The trade deficit in August was $1.04 billion compared to $1.89 billion during the same month last year. This was a visible decline helping the country to keep intact the reserves built with the help of donors.

The International Monetary Fund (IMF) helped Pakistan with an emergency fund of $7.6 billion in November to meet the balance of payments crisis. The agreement was signed in November 2008, since then reserves of the country improved while the trade deficit also helped maintain this situation.

Analysts said lower and stable oil prices also helped Pakistan spend less for its energy requirement.

The record high oil prices had deprived the country of its dollars reserves and exposed to serious balance of payments crisis.

However, like previous year overseas workers’ remittance appeared as key element in minimising the current account deficit.

Last year, remittances reached a total of about $7.8 billion while it once again started increasing its volume from the very first month of the new fiscal year 2009-10.

The remittances in August increased by 31.4 per cent to $780 million compared to $592 million in August last year.

In July, the country had received $747 million, a growth of about 20 per cent but it was still lower than the average 21 per cent growth in remittances in the year 2008-09.

The July-August combined average comes to 25.5 per cent.

If the rate of growth remains at the same pace, the country could receive about $10 billion at the end of the current fiscal year.

Analysts said if the current account deficit remains within the range as shown in two months, the country might see a positive picture at the end of on-gong financial year.