First half current account depicts $26 million surplus

The country's current account balance has become positive and registered a surplus of 26 million dollars in the first half of current fiscal year (2010-11) primarily driven by massive decline in trade and services deficit and high foreign inflows.
Current account balance had been constantly presenting deficit for a long time, largely contributed by high goods imports on the back of rising commodity prices on international front. Although there was some reduction in current account deficit in initial months of current fiscal year, cumulatively it was not surplus and, with a decline of $1.318 billion, the country's current account deficit stood at $504 million in July-November period of fiscal year 2010-2011 as compared to $1.822 billion in the corresponding period of last fiscal year.
However, a major cut in import of services and rising inflows of home remittances improved the situation and the current account balance has become in the surplus. The country's current account balance posted a surplus of $26 million during July-December 2010 as compared to $2.57 billion deficit in corresponding period of last fiscal year. The account also posted a surplus of $601 million in December 2010. During the first half of current fiscal year deficit of trade, services and income stood at $7.566 billion over current account transfers of $7.622 billion, depicting a surplus of $26 million.
Economists said that surplus in the current account is a positive indication for the policy markers and it would be put positive impact on economy. "We believe that decline in the current account deficit would also help to keep the exchange rate stable, besides strengthening the foreign exchange reserves," they said.
They said that improving current account situation also indicates stability in the country's economic and hoped that the current account deficit for the remaining period of current fiscal year was also likely to decline followed by high foreign inflows and decline in imports.
The State Bank of Pakistan statistics on Tuesday showed that trade, services and income sector presented significant improvement and contributed major share in the depleting current account deficit. Services deficit declined by 67 percent during the first half of current fiscal year.
Service sector deficit stood at $495 million with $3.112 billion exports and $3.607 billion imports in July-December of fiscal year 2011 as compared to a deficit of $1.526 billion with $3.477 billion imports and $1.951 billion export in corresponding period of last fiscal year.
The country's overall goods imports stood at $16.71 billion and exports at $11.125 billion with trade deficit of $5.585 billion during first half of fiscal year 2011, which previously stood at $5.86 billion during same period of last fiscal year 2010. Similarly, income deficit declined to $1.486 billion with $1.847 billion outflows and $361 million inflows in July-December of current fiscal year.