KARACHI, July 18: The fiscal year 2011 finally ended with the surplus current account after a long period of deficits, the State Bank reported on Monday.

The detail shows that the current account was surplus with $542 million, a much better performance compared to the previous year when the external account was burdened with a deficit of $3.946 billion.

While the surplus is a great help to the economy facing tough time with ailing growth rate, the overseas Pakistanis played a key role to mitigate the massive impact of huge trade imbalance during FY-11 through record remittances.

Though the trade imbalance was less than the previous year, it was still more than $10 billion.

The lesser trade imbalance was due to 25 per cent unexpected export growth and only 14 per cent increase in import.

The trade imbalance during FY-11 was $10.175 billion. It reduced by $1.361 billion compared previous year.

The goods exported during FY-11 fetched $25.462 billion compared to $19.673 billion of previous year, an increase of 25.7 per cent.

This higher export growth was due to shortage of cotton on global level which suddenly pushed up the prices unexpectedly in the international market providing opportunities to the countries like Pakistan to earn maximum out of export.

Pakistan earned $5.789 billion more than last year through export and mostly because of cotton-based textile products.

This export growth helped the country keep the trade imbalances within manageable level despite high oil prices which kept hovering around $90 to $100 per barrel for most of the time during the previous fiscal year. The country paid $10.9 billion for import of oil during first 11 months, which means almost $1 billion per month indicating final oil bill could reach around $12 billion at the end of the fiscal year.

This massive oil bill was the real reason for trade imbalance which is still lower than the oil bill.

In 2009-10, the country spent $10.463 billion for import of petroleum products.

Analysts said if oil prices remained around $90 per barrel, the country would suffer during the current fiscal FY-12 since the export growth is not expected to grow further like it performed during the fiscal year.

They said if the country attains the same level of export growth in FY-12, it would be a great achievement since prices of cotton-based textile products have already fallen in the international market. Pakistan earns over 60 per cent export proceeds through textile products.

In the background of surplus current account, remittances were the real force which kept increasing each month and in the last four months of fiscal year, remittances were over $1 billion each month.

The inflows through overseas Pakistanis rose to $11.2 billion during FY-11. These were 25 per cent higher than previous year but most importantly the amount constituted 44 per cent of entire export proceeds.

If the inflows kept increasing, it may be half of the entire export earnings.

Analysts said rising remittances invite serious attention of the economic managers as it not only requires protection and continuation of inflow, but also strategy to strengthen this “God-gifted” foreign exchange.

They said special plans be devised to encourage overseas Pakistanis and involve them in economic and social activities in the country.

Pakistani economic managers have been struggling hard to restore the suspended loans of the International Monetary Fund (IMF).

The total loan amount is $11.2 billion and suspended installments constitute $3.2 billion.