According to the data released by SBP from surplus in April, current account gets hit in May due to rising import bill. PHOTO: EXPRESS
Pakistan’s current account deficit in the first 11 months of 2014-15 remained $1.98 billion, according to data released by the State Bank of Pakistan (SBP) on Wednesday.
The current account deficit shrank by over $1 billion in July-May compared to the same 11-month period of the preceding fiscal year when it was more than $3 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 0.8% in July-May as opposed to 1.4% for the same period of 2013-14. In May alone, the current account balance remained in deficit: it amounted to $521 million as opposed to a current account surplus of $223 million in April. The notable change in the current account balance is partly because of a sharp increase in the value of goods imported.
On a month-on-month basis, the value of goods imported increased to $3.4 billion in May. From imports of goods valuing $3 billion in April, the month-on-month increase remained 12.2% in May.
Pakistan’s total imports of goods in July-May were $37.5 billion as opposed to $38 billion in the comparable period of 2013-14, which means an annual decrease of 1.4%.
Pakistan exported goods worth over $22 billion in July-May as opposed to exports of goods totalling $22.9 billion in the comparable months of 2013-14, reflecting a year-on-year decrease of 4%.
The value of goods exported in May decreased by $193 million on a month-on-month basis to $1.8 billion, which is 9.3% lower than the exports of goods recorded in April.
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 11 months of 2014-15 clocked up at -$17.5 billion as opposed to the deficit of $17.4 billion recorded in the same period of the preceding fiscal year.
Workers’ remittances remained $16.6 billion in July-May, up 16% from the same 11 months of the last fiscal year when they totalled $14.3 billion.
Workers’ remittances in May clocked up at $1.6 billion, registering an increase of 1.3% on a month-on-month basis.
Published in The Express Tribune, June 18th, 2015.
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