KARACHI: The current account deficit for July-September jumped 117.3 per cent year-on-year, reflecting the country’s rapidly growing trade imbalance.

The State Bank of Pakistan (SBP) reported on Friday the current account deficit in the first quarter of 2017-18 rose to $3.55 billion compared to $1.63bn a year ago. This indicates the mounting pressure on the economy because of ever-increasing foreign payments.

Finance Minister Ishaq Dar said recently that the country needs $18bn to meet foreign obligations during 2017-18. The government paid $8bn in debt servicing while the current account deficit amounted to $12.4bn in 2016-17.

The deficit expansion in the first quarter looks more aggressive than last year. It was over $2bn in July, up three times year-on-year. However, it dropped to $550 million in August. But the deficit shot up again in September to $956m, pushing the quarterly figure to $3.55bn, up 2.1 times from a year ago.

Details show the trade gap was bigger than the country’s total exports during the first quarter. Exports increased 11pc to $6.94bn while imports jumped 21.4pc to $15.39bn.

The trade deficit for the first quarter was $8.44bn, which was $1.5bn higher than total exports of $6.9bn. This shows economic managers are struggling to bring down the trade gap and improve exports.

The government is providing exporters with incentives under the Prime Minister’s package of Rs180bn. It is also trying to assure critics that over 40pc of imports constitute machinery that will eventually help grow exports.

The government recently imposed regulatory duties on the import of 36 new products and raised the existing rates on 240 items to cut the import bill. Imports of eatable and luxury items on which the duty has been raised by up to 50pc witnessed a 40pc growth in the first three months of 2017-18.

Foreign direct investment in the first quarter jumped 56pc while remittances increased just 1pc to $4.79bn.

Published in Dawn, October 21st, 2017