Improving balance of payments

Letter February 13, 2015
Pakistan will have to make pragmatic efforts for augmenting its export base.

ISLAMABAD: The current account is a component of the balance of payments (BoP) of a country, which includes the balance on exports/imports, services, net income abroad and net transfers. Workers’ remittances are recorded in net transfers. Surplus for one of these categories does not necessarily indicate an overall current account surplus unless the country has surplus for other accounts as well. The State Bank of Pakistan’s summary of the BoP for January 19 shows a deficit in all other categories, except for remittances. Although workers’ remittances stood at $10.3 billion for the first seven months of 2014-15, showing an increase of 14.6 per cent, Pakistan still has a trade deficit of $12 billion for the period of July-December 2014.

With a weaker export base and more than $65 billion in external liabilities, the country can’t rely merely on such insignificant inflows. Pakistan will have to make pragmatic efforts for augmenting its export base.

Muhammad Akram

Published in The Express Tribune, February 13th,  2015.

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