CA deficit reaches historical level

RIZWAN BHATTI
KARACHI: Followed by a higher import bill and slow foreign inflows, the country's external account continued to deteriorate as it posted a record current account deficit of about $16 billion during the first eleven months of current fiscal year (FY18).
Economists said that concerns on Pakistan’s external account are increasing as the current account deficit has reached about $16 billion mark for the first time in the history of Pakistan. “Rising goods import bill, particularly import of machinery and other equipments, and less than expected foreign inflows, have mainly contributed to the current account deficit,” they added.
The State Bank of Pakistan (SBP) on Wednesday reported that current account deficit went up 43 percent during the first eleven months of this fiscal year. The country’s current account deficit reached historical level of $15.961 billion in July-May of FY18 compared to $11.14 billion in the same period last year (FY17), depicting an increase of $4.82 billion.
The State Bank, in its recent report, has already estimated that the country will miss current account target as current account deficit will be 4 to 5 percent of GDP by end of this fiscal year against the target of 2.6 percent. As per estimates, current account deficit will be over $17 billion mark by June 2018.
A detailed analysis showed that, during the period under review, cumulative deficit of goods, services and income surged by 18 percent or $5.63 billion to $37.501 billion in July-May of FY18 up from $31.871 billion in same period of last fiscal year.
Month on month basis, the current account posted a deficit of $1.934 billion dollars in May 2018. This is the continually second month in which the size of current account deficit is almost two billion dollars; previously, some $1.947 billion deficit was recorded in April 2018.
According to SBP, with $50.719 billion imports and $22.784 billion exports, the country’s goods deficit surged to $27.935 billion in July-May of FY18 as against $23.454 billion deficit in the corresponding period of last fiscal year.
Similarly, deficit of income sector also witnessed an upward trend. Income sector deficit surged to $4.834 billion with $5.482 billion payments and $648 million receipts.