C/A deficit widens 92pc in July-August

KARACHI: Pakistan Current Account Deficit (CAD) has widened sharply by 92 percent in the first two months of the current fiscal year due to decline in inflows of remittances, slowdown in foreign direct investment (FDI) and ballooning trade deficit.

According to Balance of Payment (BOP) statistics issued by State Bank of Pakistan (SBP) on Wednesday, CAD widened to $1.136 billion during July-August 2016, as compared with the deficit of $686 million in the corresponding months of the last fiscal year.

The inflow of remittances declined to $3.089 billion during the first two months of the current fiscal year, compared with $3.19 billion in the corresponding months of the last fiscal. The FDI declined 53 percent to $112.6 million in the period under review as compared to $240.8 million.

Similarly, trade deficit for the period widened by 27.28 percent to $4.75 billion as compared with deficit of $3.73 billion.

The current account was the broadest indicator of trade in goods and services. It showed flows of primary and secondary income between residents and non-residents.  The country’s current account in the recent past benefited from international soft commodity prices and stable remittance inflows.

Analysts said that stalled Coalition Support Fund (CSF) also pressurised the balance of payment statistics. They said that lower international oil and commodity prices would depress Pakistan’s exports in the coming months. They said that the fall in oil prices had forced many developed economies to cut jobs, which affected the global remittances market.