KARACHI: The current account deficit widened by 148.5 per cent to an all-time high of $12.09 billion for 2016-17, the State Bank of Pakistan (SBP) reported on Wednesday.

The deficit was $4.86bn in the preceding fiscal year. The balance on trade in goods jumped to a deficit of $26.8bn compared to $19.3bn in 2015-16.

The government has failed to improve exports. Instead of growing foreign sales, Pakistan’s exports have been declining for the last four years. This is making it more difficult for the government to contain the rapid fall in foreign exchange reserves.

Rupee to come under more pressure

The balance on goods and services registered a deficit of $30.5bn compared to $22.7bn in 2015-16.

The growing current account deficit has practically neutralised the positive impact of about $19bn remittances sent by overseas Pakistanis. For the first time in more than a decade, remittances declined on a year-on-year basis in 2016-17.

Data shows unchecked imports proved disastrous for the external sector of the economy. The deficit hurts the country’s ability to sell bonds in the international market. The government has been planning to sell euro bonds. But the weakness on the external front with a $12.1bn current account deficit means that the government is unlikely to get a favourable rate of return.

Published in Dawn, July 20th, 2017