Current account deficit shrinks, clocks in at $1.4 billion

Stood at $2.69b during nine months of previous fiscal year

KARACHI: Pakistan’s current account deficit in the first nine months of 2014-15 remained $1.46 billion, according to data released by the State Bank of Pakistan (SBP) on Friday.

The current account deficit shrank by $1.23 billion in July-March compared to the same nine-month period of the preceding fiscal year when it was $2.69 billion. The decrease is partly attributable to the Coalition Support Fund (CSF), as Pakistan received $717 million in the second week of February.

A deficit or surplus reflects whether a country is a net borrower or 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 0.7% in July-March as opposed to 1.5% for the same period of 2013-14.

In March alone, the current account balance remained in surplus: it amounted to $163 million as opposed to a current account surplus of $872 million in February and deficit of $74 million in January. The notable improvement in the current account surplus in February was a result of month-on-month increase of 201.4% in the exports of services to $1 billion.

Pakistan exported goods worth over $18.1 billion in July-March as opposed to exports of goods totalling $18.7 billion in the comparable months of 2013-14, reflecting a year-on-year decrease of 3.3%.

The value of goods exported in March increased by $185 million on a month-on-month basis to $2 billion, which is 9.9% higher than the exports of $1.8 billion recorded in February.

Pakistan’s total imports of goods in July-March were $30.8 billion as opposed to $31.2 billion in the comparable period of 2013-14, which means an annual decrease of 1.1%.



On a month-on-month basis, the value of goods imported increased to $3.1 billion. From imports of goods valuing $2.7 billion in February, the month-on-month increase remained 12.9% in March.

Total oil imports constitute roughly 36% of Pakistan’s total import bill. According to Topline Securities, a 30% decline in oil prices is likely to result in annual savings of $4 billion or 1.5% of GDP. As a result, Pakistan is likely to witness current account surplus in 2015-16, it says.

The balance of trade in both goods and services at the end of the first nine months of 2014-15 clocked up at -$14.1 billion as opposed to the deficit of $14.6 billion recorded in the same period of the preceding fiscal year.

Workers’ remittances remained $13.3 billion in July-March, up 15% from the same nine months of the last fiscal year when they totalled $11.5 billion. Workers’ remittances in March clocked up at $1.5 billion, registering an increase of 13.3% on a month-on-month basis.

Published in The Express Tribune, April 18^th, 2015.

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