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Services exports fall 24.6pc in July-Oct

By Erum Zaidi
December 03, 2016

KARACHI: Pakistan’s services exports fell 24.6 percent in first four month of the current fiscal year of 2016/17 on slowdown in the US security assistance to the country, the central bank data showed on Friday.

The State Bank of Pakistan (SBP) revealed that the country’s services exports fell to $1.613 billion during July-October period of FY17 from $2.140 billion in the corresponding period of last fiscal year.  

Historically, inflows under government services – mainly coalition support fund (CSF) and other military services - accounted for more than one-third of the country’s total services exports. The share is substantially higher than the share of government services of only 2-3 percent in the global services trade.

However, the inflows under the CSF fell drastically during the last fiscal year. The SBP’s figures showed that the CSF-related and non-CSF government goods and services saw a decline of 62.2 percent during the period under review.  These exported services stood at $398 million in July-October FY17, compared with $1.052 billion in July-October FY16.

The US administration had stopped tranche of $300 million in military reimbursements to Pakistan in August 2016 over Islamabad’s alleged reluctance to act against the Haqqani network-- a charge Islamabad had strongly rejected.

The break up on exports of goods and services by major countries also showed that the share of the United States in total country’s services exports fell 57.3 percent in the first four months of the ongoing fiscal year.

The export receipts from the US under military and other assistances remained at $497 million in July-October period against $1.166 million recorded in the same period of the last fiscal year.  

The CSF is non-economic and one off nature of government services, the higher share does not bode well for long-term stability of exports receipts. The CSF related receipts are linked with foreign troops’ presence in Afghanistan, the continuity of these flows is uncertain at best.

The exports of transport services rose 5.3 percent to $397 million in July-October FY17 against $377 million a year earlier.   In the category of information and communication technology (ICT) services, exports increased to $286 million from $236 million in July-October FY16.

Pakistan’s services sector contributed 59.2 percent to the country’s gross domestic product in FY16.  The country exported services worth $5.4 billion in the last fiscal year, with a deficit of $2.9 billion.

The central bank in its annual report for the last fiscal year said concerted efforts were needed to facilitate services exports. The bank suggested “strengthening the regulatory framework; well-thought liberalisation of trade in services; investment in human resource development; improving access to finance for service-oriented industries; encouraging the private sector to form services coalitions and enterprise networks; promoting specialization in financial services; and improving data availability.”