Current account deficit shrinks 18.5pc to $1.6bln in July-March

KARACHI: Pakistan’s current account deficit narrowed 18.5 percent to $1.606 billion in the first nine months of the current fiscal year, the central bank said on Wednesday.

The State Bank of Pakistan (SBP) data showed that the current account deficit amounted to $1.971 billion in the July-March period of 2014/15. 

Analysts said the contraction would have been better if growth momentum in remittance inflows and exports receipts maintained.

They said the balance of payment will remain under control as no major foreign debt repayments have been made as yet. 

“The current account deficit is likely to stay less than one percent of the GDP in the current fiscal year,” said Khurram Shehzad, chief commercial officer at JS Global.

The remittances registered only four percent growth to $14.15 billion during the first nine months of 2015/16 as compared to $13.59 billion a year earlier. 

The ease in growth of inward remittances was due to fall in monthly inflows. The remittances declined 8.7 percent to $1.47 billion in March 2016 from around $1.6 billion in the same month of the last year

The analysts attributed the fall in remittances to global economic slowdown.

Despite the lower international prices of oil and other commodities, the trade deficit widened 5.35 percent in July-March 2015/16.

The analysts attributed the widening trade deficit to fall in exports.

Exports fell 12.92 percent to $15.606 billion during the period under review as compared to $17.92 billion in the comparable period.

The SBP data showed that the total foreign direct investment (FDI) increased 15 percent to $975.4 million in July-March as against $832.2 million a year ago. Analysts said the inflows under China-Pakistan Economic Corridor projects improved the FDI numbers.

The SBP further said the net disbursements or inflows in terms of credit and loans in July-March 2015/16 amounted to $4.45 billion as compared to $2.74 billion in July-March 2014/15. Amortisation stood at $2.294 billion as against $2.149 billion.