Net borrower: Current account deficit clocks in at $1.7 billion
Pakistan’s current account deficit in the first four months of 2014-15 remained $1.7 billion, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
The current account deficit widened $391 million in July-October compared to the same four-month period of the preceding fiscal year when it was $1.36 billion.
A deficit/surplus reflects whether a country is a net borrower/lender of capital with respect to the rest of the world.
As a percentage of the gross domestic product (GDP), the current account deficit stood at 1.8% in July-October as opposed to 1.7% in the same period of the last fiscal year.
In October alone, the current account balance clocked up at $347 million. Last month, the SBP had reported a current account surplus of $3 million for the month of September. However, the revised data says the country had a current account deficit of $79 million in September.
Increasing imports and decreasing exports have widened Pakistan’s current account deficit during the first four months of 2014-15. Pakistan exported goods worth over $8 billion in July-October as opposed to exports of goods totalling $8.34 billion in the comparable months of 2013-14, reflecting a year-on-year decrease of 3.3%.
The value of goods exported in October decreased by $105 million on a month-on-month basis to $2.09 billion, which is 4.8% less than the exports of $2.19 billion recorded in September.
Pakistan’s total imports of goods in July-October were $15.5 billion as opposed to $14.1 billion in the comparable period of 2013-14, which means an annual increase of 9.5%. On a month-on-month basis, however, the value of goods imported decreased 9.3%, as Pakistan imported goods worth $3.6 billion in October.
The balance of trade in both goods and services at the end of the first four months of 2014-15 clocked up at -$8.1 billion as opposed to the deficit of $6.7 billion recorded in the same period of the preceding fiscal year. Workers’ remittances remained $6.07 billion in July-October, up 15.2% from the same four months of the last fiscal year when they totalled $5.2 billion. Workers’ remittances in October clocked up at $1.3 billion, registering a decline of almost 20% on a month-on-month basis.
The country’s balance of payment (BoP) position weakened in 2013-14, as foreign exchange reserves held by the central bank decreased to only $2.8 billion in February.
With an import cover for less than a month, a low level of foreign exchange reserves prompted federal authorities to force exporters to bring their dollar-denominated revenues into the rupees before the stipulated limit of 120 days.
SBP-held reserves improved following alleged intervention from policymakers into the foreign exchange market, resulting in a year-on-year increase of more than 50% by the end of the fiscal year in June. SBP-held reserves currently stand at $8.4 billion.
Published in The Express Tribune, November 20th, 2014.
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Its high time that managers of this country learn to tell truth and stop cooking their books and fudging economic data, as they are only fooling themselves as rest of the world is well aware of the reality and take these data with pinch of salt !
Nawaz Sharif has the $ 391 millions in his and family's off shore accounts. Managed by London bankers and brokers.