KARACHI: The current account deficit (CAD) narrowed down 22.5% to $8.84 billion in the first eight months (July-February) of current fiscal year 2019, reported the State Bank of Pakistan (SBP) on Friday.
The much-needed drop in the deficit became possible mainly due to a notable surge in workers’ remittance inflows and a significant contraction in the outflow on account of services imports during the period under review.
The overseas Pakistani workers’ remittances increased 12% to $14.35 billion in the eight months due to increased efforts to receive the inflows through proper banking channels.
“The growth in remittances inflow is in line with SBP’s projections and the government’s efforts to receive the inflow through proper legal channels,” a senior analyst told The Express Tribune. Remittances stood at $12.83 billion in the same period last year, the central bank reported.
Trade deficit shrinks 5% to $16.8b as imports go down
Secondly, the import of services faced a massive reduction of 24% to $5.77 billion in the period under review compared to $7.17 billion in the corresponding period of previous fiscal year. “The import of services has dropped due to a drastic cut in international traveling expenses,” the official added.
Three-year low deficit in Feb
The current account deficit declined massively to over a three-year low in the single month of February 2019, mainly due to a drastic fall in the import of goods.
The deficit contracted to $356 million in February, a figure which was last recorded during the third quarter (January-March 2016) of FY16, the available quarterly data at the SBP suggested.
Published in The Express Tribune, March 16th, 2019.
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