CA deficit soars to $6.43 billion in July-November

The country's external account continued to deteriorate and posted over 6 billion dollar current account deficit during the first five month of this fiscal year. Economists said that some concerns have been emerged on external account due to insufficient foreign financial inflows and higher current account deficit. They said that rising goods import is primary reason for the widening current account deficit. "The increase in the current account deficit was mainly due to 23 percent surge in the country's import bill, which shot up to $21.88 billion in the first five months of this fiscal year (FY18)," they added.
Although, goods exports have also posted some growth, however the growth in exports is much lesser than goods imports, they said and added that most of imports are for CPEC-related power and infrastructure development projects, which has stimulated the demand for machinery, heavy vehicles and fuel.
The State Bank of Pakistan (SBP) on Wednesday revealed that current account deficit sharply increased by 91 percent during the first five months of current fiscal year. The country's current balance posted a deficit of $6.43 billion in July-November of FY18 compared to $3.371 billion in some period of last fiscal year (FY17), depicting an increase of $3.059 billion.
The detailed analysis showed that, during the period under review, cumulative deficit of goods, service and income was surged by 26 percent. With current increase, combined deficit of goods, services and income reached $16.166 billion mark in first five months of current fiscal year compared to $12.784 billion in same period of last fiscal year.
Economists said that inflows of home remittances has registered sluggish growth during the period under review and with 1.28 percent growth some $8.021 billion workers' remittances were arrived in the first five months of FY18. There is need to generate more resources of foreign inflows to meet the rising current account deficit. The federal government has already borrowed some $2.5 billion through sale of Sukuk and Eurobond in the world market to build depleting foreign exchange reserves.
According to the SBP with $ 9.788 billion exports and $21.88 billion imports, the country's goods deficit surged to $12.093 billion in July-November of FY18 as against $8.992 billion trade deficit in corresponding period of last fiscal year. During the period under review, services trade deficit was $2 billion with $2.076 billion exports and $4.2 billion imports.
Similarly, deficit of income sector also witnessed some growth. Income sector deficit stood at $1.977 billion as its payments were $2.23 billion as against receipts of $256 million. During November 2017, current account deficit was $1.436 billion as against $1.296 billion in October 2017.
It may be mentioned here that the country's current account posted over $12 billion deficit, up 148 percent, during the last fiscal year on the back of a widening trade deficit and slowdown in remittances.