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Current account gap widens 48pc

Updated February 21, 2018

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KARACHI: Pakistan’s current account deficit widened by 48 per cent in the first seven months of the fiscal year, reflecting the mounting pressure of trade deficit which jumped by 24pc in the same period.

The State Bank of Pakistan (SBP) reported on Tuesday that the current account deficit during July-Jan rose to $9.156 billion compared to $6.182bn deficit noted in the same period of 2016-17.

In the month of January, the current account deficit increased to $1.617bn against $1.256bn in December. The January deficit was even higher than the monthly average deficit of $1.308bn.

The trend suggests that the overall deficit could be around $15bn by the end of 2017-18 if the current trajectory persists.

The balance on trade in goods increased by $3.3bn to $17.133bn during this period while the balance on trade in goods and services rose to $20.09bn.

In the wake of widening current account deficit, the country needs higher inflows like remittances and foreign direct investment but the inflows from both these sources are not sufficient to meet the deficit.

The foreign exchange reserves of the country have been declining despite the government’s borrowing of $2.5bn from the sale of bonds in the international market. The SBP reserves fell to $12.83bn last week versus $14.106bn in December 2017.

Published in Dawn, February 21st, 2018