KARACHI: The current account deficit rose by 50 per cent to $12.029 billion in the first nine months of FY18, reflecting the increasing burden of trade deficit on external front of the economy.

The State Bank of Pakistan reported on Thursday that the trade deficit of goods and services grew to $26.15bn during July-March FY18 against $21.35bn in the corresponding period of 2016-17.

The details show that the exports of goods increased by $1.95bn to $18.26bn in the nine months while the imports jumped by $5.77bn to $40.57bn in the same period.

The collective trade deficit of goods and services during this period was $26.15bn as against $21.35bn in the same period of last year and with the inclusion of primary income, the figure rose to $29.7bn.

The huge deficits create a serious threat for the economy while the country is already under grip of political uncertainty. The erosion of foreign exchange reserves of the SBP due to increasing current account deficit is also critical as it fell by $2.72bn to $11.379bn since the beginning of this calendar year.

Neither remittances nor foreign direct investment showed any significant improvement during the 2017-18; in fact, it is feared that uncertain political situation could generate negative effects for the foreign investments in the country.

The SBP report shows the imports of goods and services collectively amounted to $48.278bn during July-March, higher by $6.3bn, versus $41.986bn in the corresponding period of last 2016-17. The average per month import figure stood at $5.346bn which means the total imports at the end of FY18 would be around $64bn, assuming the mean remains same.

The country desperately quick inflows within the next few months to keep paying the foreign obligations but government doesn’t seem to be have anything on the cards. So far, International Monetary Fund has not been officially approached for loans to tackle the worsening situation.

Published in Dawn, April 20th, 2018