Current account deficit narrows 4.51pc in July-February

KARACHI: Pakistan’s current account deficit slightly narrowed 4.51 percent to $1.859 billion during the eight months of the current fiscal year, the central bank said on Monday.  

The State Bank of Pakistan (SBP) data showed that the current account deficit for July-February of 2015/16 stood at 0.9 percent of GDP. The current account deficit amounted to $1.947 billion in the same period of the last fiscal year.  

The SBP said the current account deficit stood at $157 million in February as compared to $590 million in January.

Analysts said the frequent fall in the prices of oil and commodities could not lend support to the weak balance of payment position.   The analysts said the imports of non-petroleum products are on the rise, while exports are on the downward path.   However, some analysts foresee a positive outlook for the external sector for the current fiscal year.

They believe that the financing of this deficit may not be an issue due to higher expected inflows, on account of projected loans from China and international financial institutions.

It is also expected that the country’s foreign exchange reserves will remain at an adequate level on the back of the debt inflows. 

“However, the non-debt inflows (especially exports and foreign direct investment) will remain a challenge for the struggling economy,” said an analyst.   The SBP data showed that Pakistan’s trade in goods and services posted a smaller deficit in the eight months of the current fiscal year. The deficit amounted to $13.372 billion in July-February FY16 as against $13.388 billion in July-February FY15. Merchandise exports stood at $14.397 billion in July-February as compared to $15.982 billion in the comparable period. Imports decreased to $26.306 billion from $27.917 billion a year earlier.