KARACHI: Country’s current account deficit has surged to $ 5.013 billion during the July-October 2017-18, which is almost double compared to $ 2.259 billion in the same period last year. It indicates a poor financial management of the financial government.
According to the data released by the State Bank of Pakistan (SBP) on Monday, the State Bank reported 121 per cent increase in the current account deficit of the country in July-Oct 2017.
“The balance of payment figures rang an alarming bell for the economists as the deficit touched $ 1.3 billion in October compared to $ 1.09 billion in September 2017,” an analyst said. The current account deficit is widening only because of rising country’s imports bills and lower inflows of foreign direct investment (FDI).” The CAD widened almost double in last three months.
Despite all week indicators, the SBP figures show that the country’s Gross Domestic Product (GDP) surged by 10.69 per cent to $ 113.554 billion in last four months compared to $ 101.405 billion in the same period last fiscal year. According to the SBP’s projection, full-year GDP would remain around 6 per cent in 2017-18.
Despite rising CAD, the foreign exchange (FX) reserves of the State Bank have been under pressure and were slightly improved in October 2017 to $ 13.677 billion, which covers only 3-months of imports bills.
The analyst forecasts the CAD during 2017-18 to be in the range of $ 16.0-16.5 billion (5.0 per cent -5.5 per cent of GDP), up from $ 4.9 billion in 2015-16 and $ 12.1 billion in 2016-17.
The import bills had touched $ 17.395 billion in past four months which is almost two times above the local export’s inflows, the SBP’s data said.
The federal government through Federal Board of Revenue (FBR) issued a list of 731 items to impose 30-50 per cent regulatory duty on import of goods, which will halt the imports of luxurious goods.
The State Bank is persistently facing payment pressure from international donor agencies including the International Monetary Fund (IMF). The central bank has so far maintained exchange rates in the interbank market despite pressure on the rupee. Now it is being traded in the interbank market at Rs 105.40 today compared with Rs 104.83 in June 2016.
