SERVICES TRADE DEFICIT UP BY 34 PERCENT ON ABSENCE OF CSF INFLOWS

RECORDER REPORT

KARACHI: In the absence of Coalition Support Fund (CSF) inflows, the country's services trade deficit continued to move up and swelled by 34 percent during the first half of this fiscal year (FY17). Economists said as against the $1.1 billion estimated inflows, Pakistan has not received a single penny on account of CSF from the US during current fiscal year, while some $713 million CSF inflows were arrived during July-December of FY16.

They said during last few years, CSF inflows have largely contributed to post a lower services trade deficit. "The services trade deficit is expected to be over $3 billion by the end of this fiscal year, if estimated CSF inflows not matured," they added. According to State Bank of Pakistan (SBP) the country's services trade posted a $1.709 billion deficit during July-December of FY17 compared to $1.275 billion in the same period of FY16, showing an increase of 34 percent or $434 million.

The detailed analysis revealed that during the period under review, services sector exports fell by 12 percent and imports rose by 2 percent. Pakistan's services sector exports stood at $2.535 billion in the first half of this fiscal year against $2.895 billion in the corresponding period of last fiscal year, showing a decline of $360 million.

Similarly, services sector imports posted an increase of $74 million to reach $4.244 billion in July-December of FY17 against $4.17 billion in the same period of FY16. The detailed analysis revealed that excluding CSF inflows, most of services trade exports have performed well during this fiscal year. During the period under review, the country earned $508 million on account of transportation services, $154 million from travel, $453 million from telecommunications/computers, $40 million from construction, $71 million through financial services, $82 million from insurance sector and some $653 million on account of government services.

Meanwhile, transportation payments (imports) stood at $1.723 billion, travel $799 million, telecommunication $198 million, financial sector $122 million, insurance $131 million, some $120 million charges for use of intellectual property and an amount of $307 million was paid as government services were paid. Month-on-month basis, during December 2016, services trade registered a $322 million deficit with $482 million exports and $804 million imports.