LAHORE: Increasing imports and decreasing exports have negatively inflated Pakistan’s current account deficit to $589 million in November despite it received handsome inflows from remittances reaching the overall imbalance of payment at Rs 1.885 billion since the start of current financial year.
The months stood at $ 608 million in September and $58 million in October which showed that payment on the account of goods and services imports were controlled in the previous months.
The overall current account deficit has widened to $1.234 billion in the first quarter of 2013-14 against the surplus of $439 million showed in the corresponding period of last financial year, State Bank of Pakistan stated.
Economists said the inflows of $505 million will stabilize foreign exchange reserves on temporary basis however the government should curtail imports expenses and enhances exports avenues on long-term basis to stand strong foreign exchange position.
The 17% hike in the central bank’s foreign exchange reserves is mainly on the back of inflows amounting to $430 million from multilateral and bilateral sources. Pakistan received $144 million from the United Kingdom’s Department for International Development, $137 million from the Islamic Development Bank and $149 million from other multilateral institutions, according to an SBP spokesman.
Further the payment of IMF program’s along with financial assistance of Asian Development Bank (ADB), World Bank and Islamic Development Bank from $1.5 to $1 billion will stem the deficit with rising foreign exchange reserves which stood at $8.5 billion.
Further the reimbursement of Coalition Support Funds from US Government of $ 32.5 million will slightly benefit to balance of payment situation.
However the depreciation of rupee against dollar has taken toll on the imports bill and debt services of a country which put additional burden of current account deficit.
But the trade deficit that continued to swell to $7.269 billion in the Jul-Nov from $6.648 billion in the corresponding period of last fiscal year have kept the balance of payment in the crisis.
The remittances in the first quarter of 2013 were seen growth to reach $6.407 billion. On the other hand, the country’s foreign direct investment (FDI) surged by only 4.7 percent to $330.7 million in the first five months (July-November) of the fiscal year 2013-14 as compared to $315.8 million received in the same period of last fiscal year.