KARACHI: The current account deficit widened 91 per cent year-on-year in the July-November period to $2.601 billion, the State Bank of Pakistan (SBP) said on Tuesday.
The deficit in November skyrocketed 120pc to $839 million compared to October’s. The trend could be alarming, particularly in the wake of increasing imports and falling exports.
The current account is the broadest measure of trade, covering not only the flow of goods and services but also investment flows. The current account deficit reflects Pakistan’s trade gap with the rest of the world and the shortfall between money paid out by the country and money coming in.
The country has been facing acute shortage of foreign exchange inflows from the traditional sources. Remittances are declining, foreign direct investment (FDI) fell 45pc, whereas exports are also on the wane.
The State Bank reported earlier that FDI during July-November could not touch even half a billion dollars and remained at $460m. Most inflows came from Beijing under the China-Pakistan Economic Corridor.
The current account deficit in the 5 months was mainly the output of increasing trade deficit. During the five months the trade deficit for goods and services increased to $10.019bn which was much higher than the deficit noted in the same period of last fiscal; $8.579bn.
The country has been facing immense pressure due to falling exports despite announcing a number of incentives, including cheaper money. The foreign exchange reserves of the country are still above $23bn, but declining inflows have significantly impacted the exchange rate.
The US dollar has crossed Rs108 in the open market and it has become increasingly difficult to meet the currency’s burgeoning demand amid short supply. However, the SBP has used its regulatory muscle to keep the greenback below Rs105 in the inter-bank market.
While the federal government has been announcing on a daily basis that the country has been achieving higher economic growth and economy is on the path to progress and prosperity, all major indicators are pointing in the opposite direction.
courtesy : dawn news