The country's current account deficit narrowed down by 29 percent during the first nine months of this fiscal year (FY19) followed by lower goods and services deficit. Economists said that the country's external account continues to improve on back of lower services and goods import bill. "Exchange rate depreciation and other regulatory measures have resulted in some improvement on external front during this fiscal year," they added.
The balance on trade in goods and services has reached even less than last year's level. While, some 9 percent increase in workers' remittances has also contributed largely in curtailing current account deficit.
According to State Bank of Pakistan (SBP), current account posted $9.588 billion deficit in July-March FY19 compared to $13.589 billion in same period of last fiscal year (FY18), depicting a decline of $4 billion.
Current account as percentage of GDP has also declined sharply, but still higher than actual target of -4 percent set for this fiscal year. In term of GDP ratio, the current account deficit is stood at -4.4 percent of GDP end of March 2019 down from -5.7 percent in March 2018.
Cumulative deficit of goods, services and income sector fell 11 percent or $3.37 billion to $27.727 billion in the first nine months of this fiscal year compared to $31.089 billion in the corresponding period of previous year. The declined in cumulative deficit is attributed due to sharp fall in import bill of goods and services trade.
The country's overall goods deficit declined to $21.306 billion with $18 billion exports and $39.314 billion imports during July-March FY19. Previously, goods deficit was stood at $23.095 billion in same period of FY18.
During the period under review, with $3.945 billion exports and $6.479 billion imports, services trade deficit stood at $2.534 billion, down 41 percent.
Month on Month basis, the country's current account balance registered $854 million deficit in March 2019 compared to $308 million in February, showing an increase of 177 percent or $546 million.
Some improvement is expected to continue in the remaining months as imports are likely to contract further on account of moderating domestic demand and relatively low international commodity prices as compared to that at the beginning of FY19.
Meanwhile, during the week ending 12 April 2019, SBP's reserves decreased by $1.028 billion to $9.244 billion, due to payments on account of external debt servicing, including principal repayment of one billion dollar against Pakistan Sovereign Bond.
The total liquid foreign reserves held by the country stood at $16.196 billion end of the week including $6.952 billion net foreign reserves of commercial banks.