Country’s current A/C deficit shrinks to $6.09bn in July-Nov 2018-19
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KARACHI: The Current Account Deficit (CAD), which started sliding from its peak of $18.989 billion in 2017-19, further declined to $6.09 billion in first five months of the current fiscal year compared to $6.812 billion in the same period last year. The deficit started declining from the September this year.
Pakistan’s current account deficit in November rose by 3.46% month-on-month (MoM) to $1.255 billion from $1.213 billion in October, according to data released by State Bank of Pakistan (SBP) on Wednesday.
“The deficit will continue sliding in the near future and 2019-20 and 2020-21 will be a break-even year for the economy,” said Asad Umer federal finance minister on a private television.
In first five months of the current fiscal year, CAD declined by 12.34 per cent or $752 million.
The central bank had further depreciated the local currency (Pak Rupee) in the interbank market by around 5 per cent in first week of November, while it had depreciated rupee by 8 per cent in September. The dollar is trading at Rs 138.94 in the Interbank market today. On the other hand, the SBP has also enhanced discount rates by 150 basis points to 10 percent this month. The central bank has pushed up the policy rates by cumulative 425 basis points since January 2018.
The dollar reversed from Rs 142 in the interbank market after the intervention of the finance ministry and the Prime Minister Imran Khan.
On the other hand, the government had also enhanced the regulatory duties on 571 products 45-day back to overcome the rising imports.
Asad Umer had claimed that the current account deficit will estimate 33% drop to $12 billion in current fiscal year 2019, compared to a record high of $19.5 billion.
According to the SBP, the exports of the country stood at $9.851 billion in July-Nov, which is contrary to the Pakistan Bureau of Statistic (FBS) exports data of $9.120 billion. Similarly, the imports’ figure is also slightly higher and stood at $22.743 billion compared to the FBS data of $23.633 billion in July-Nov period.
The government has started gaining results of the measures taken to control the rising imports of the country, said an analyst of a brokerage house. The finance minister is also negotiating with International Monetary Fund (IMF) to get financial help.
The IMF delegation, which visited Pakistan in November this year, will further renegotiate the loan conditions with Pakistan again in January 2019. The government of Pakistan has asked for a bailout package of $6 billion from the IMF.
The central bank had received $2 billion from Saudi Arabia in last two months, while another $1 billion will be received in January 2019 in the head of financial support.
The current A/C deficit was widening only because of rising country’s imports bills and lower inflows of foreign direct investment (FDI).
Despite receiving $2 billion dollars from the Saudi Arabia, the foreign exchange (FX) reserves of the State Bank have gone up only to $14.7 billion.
The import bills had touched $55.8 billion in last fiscal year which is more than double of the total export’s inflows of $24.772 billion, the SBP’s data said.
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