Thanks to Coalition Support Fund (CSF) inflows, the country's services exports crossed $5 billion mark in first 10 months of this fiscal year. "Services trade witnessed improvement during this fiscal year over last year, primarily on the back of higher CSF inflows," analysts said. Pakistan benefited from CSF inflows worth over $1.45 billion so far in FY15 against $675 million in same period of FY14.
As per projections, $240 million were expected each in the second, third and fourth quarters of FY15. However, the CSF tranche expected in the second quarter was delayed and payment came later in third quarter of FY15. As no inflows were arrived in the second quarter of FY15, Pakistan received some $717 million inflows under the CSF in February 2015. Earlier, some $735 million were received on account of CSF in first quarter of this fiscal year.
According to State Bank of Pakistan, services sector exports continued to move upward and with an increase of 19 percent, crossed $5 billion mark during first 10 months of this fiscal year. Pakistan's services exports reached $5.023 billion mark in July-April of FY15 compared to $4.203 billion in the corresponding period of FY14, depicting a surge of $820 million.
During the period under review, services imports witnessed slight increase of one percent to $6.717 billion in first 10 months of this fiscal year compared to $6.646 billion in the same period of last fiscal year. With massive growth in exports and minor surge in imports, the services trade deficit registered a 30 percent decline during the period under review. Services trade posted a $1.694 billion deficit in July-April of FY15 against $2.423 billion in the corresponding period of last fiscal year.
Analysts said decline in services deficit has also supported the current account, which shows a much reduced deficit followed by higher services exports. "Some support to this account should also come from lower freight expenses, as shipping companies have apparently started passing on the impact of cheaper oil to their customers. Freight contributes nearly 95 percent of the country's services deficit, and the balance depends heavily on oil prices and import values," they added. They are expecting that the services account may also gain from low freight expenses going forward. Month-on-month basis, services trade posted $266 million deficit with $390 million exports and $656 million imports.