Alarming deficit

This refers to the news report ‘Current account deficit widens 93pc to $ 3.585 bln in July-Dec’ (Jan 19). The current account represents the balance sheet of country’s external transactions. It is a key barometer of the economy’s performance and impacts international credit rating and the value of its currency. The huge deficit during the six month period signifies that the foreign exchange receipts are much less than the foreign exchange spending, meaning that the nation is living beyond its means. Unfortunately, the country doesn’t pay much emphasis on trading activities, local manufacturing and technology-based farming. As a result, the country has turned into a consumer market where all types of foreign goods including luxury and fancy items are allowed to be freely imported, damaging the local manufacturing base of the country.

The persistent imbalance in current account is forcing the government to go for unabated borrowings from expensive international market to bridge the gap which has created a serious debt trap and is no longer manageable. This shows that the government is unable to meet financial obligations, both domestic and external, from its resources.

Erum Arif

Karach