KARACHI: The country posted $99 million current account surplus in October after a gap of more than four years indicative of the recovery from long-prevailing deficits but the four-month current account position still showed a deficit of $1.5 billion.
The latest data released by the State Bank of Pakistan (SBP) showed the government has succeeded in bringing down the current account deficit.
The country’s current account deficit, in the last fiscal year, clocked in at $12.75bn, down 36 per cent from record-high $19.9bn in FY18.
The data for October showed the current account was positive 99m against a net deficit of $1.28bn in the same month of previous fiscal year.
Four years of deficits end in October
During the cumulative July-Oct period, the current account deficit reached to $1.474bn compared to $5.6bn last year. The deficit sharply reduced in the last four months reflecting significant improvement on the economy’s external front.
The details showed the deficit fell drastically due to sharp decrease in imports, which fell to $14.65bn from $19bn in the same period last fiscal year. However, exports of goods increased to $8.22bn compared to $7.9bn in the last fiscal year.
Subsequently, trade deficit fell to $6.4bn compared to $11bn during the period under review. However, trade of services during the period under review did not show any significant change when compared to same period last fiscal year.
Exports of services during the four months clocked in at $1.749bn compared to $1.709bn during last fiscal year. Imports of services, on the other hand, reached to $3.117bn compared to $3.076bn in FY18.
The trade deficit in services clocked in at $1.368bn compared to $1.367bn in the same period last fiscal year.
During the current fiscal year, rising inflows have helping the government improve its foreign accounts. In the first four months, the FDI jumped by 238pc. The equity market is also receiving foreign investment while the government’s security papers have received investment of around $800m.
The surplus in October and narrowing of four-month current account deficit was mainly achieved due to a massive cut in the imports’ bill. The government is facing criticism that the massive decline in imports have slowdown overall economic activities which would ultimately hit the GDP growth rate.
Recently, the SBP governor said the fall in current account deficit is a big achievement for country and is a sign of macroeconomic stability.
Published in Dawn, November 19th, 2019