The expense of the imports and low receipts of foreign exchange continued to widen the huge current account deficit (CAD), surpassing the level of Rs. 5 billion in just four months of the financial year, which was projected as the estimate of whole financial year by State Bank of Pakistan (SBP).
According to the SBP, the current account deficit has surged to Rs. 5.013 billion during the period of July to October 2017, as compared with Rs. 2.25 billion reported in the same period of last year, showing a whopping gap of 121 percent year-on-year.
The current account deficit was projected to remain around last year’s level, that is, in the range of 4.0 to 5.0 percent of GDP as per SBP estimation. Thus the current account should have settled between $4 billion to $5 billion.
According to analysts, the deficit of current account is staggeringly high, posing a challenge to economic managers to contain the situation of microeconomic indicators that also has a negative impact on various factors of the economy.
The deficit is due to the continuation of machinery imports both for CPEC and non-CPEC energy and infrastructure projects, whereas, imports for plant upgradation under the ongoing export package for the textiles sector also added to the pressure.
Receipts of goods’ exports were a little higher at $7.65 billion in first four months of FY18 as compared to $6.87 billion in the same period of FY17, depicting an increase of 11 percent in values. On the other hand, import bill of goods was quite huge in July to October 2017 recorded at $17.39 billion as compared to $13.7 billion, depicting an increase of 26.2 percent year-on-year.
The imbalance of payment between exports and imports stood at $2.845 billion in July to October. The imbalance of service trade stood at $129 million in July to October 2017.
Resources such as remittances were also received higher by Pakistanis, which was $6.4 billion in first four months of FY18 from $6.302 billion registered in the same period of last year showing a slight growth year-on-year.