KARACHI: The current account deficit (CAD) of the country further widened by 12.18 per cent to $2.2 billion in the first month of the current fiscal year compared to $1.93 billion in July 2017, according to data released from the State Bank of Pakistan (SBP) here on Monday.
According to the SBP, the exports of the country stood at $2.009 billion in the month of July 2018, which is contrary to the Pakistan Bureau of Statistics (FBS) exports data of $1.646 billion. Similarly, the imports’ figure is also slightly higher and stood at $5.556 billion compared to the FBS data of $4.838 billion in July 2018.
Newly elected Prime Minister Imran Khan, in his Sunday speech, appealed to the Pakistanis living abroad to send their money through banking channels and invest in their own country to overcome the rising current account deficit and trade gap.
Premier Imran Khan assured investors that his government will provide all kinds of investment opportunities to Pakistanis living abroad. “Pakistan needs dollars to pay-off loans and Pakistanis should support us to bring the country out from the financial crisis,” he said.
CAD soared up by 12.18 per cent in the month of July 2018. The deficit enhanced by $224 million compared to June 2018 and $268 million of July 2017.
During the last fiscal year, the CAD indicates a poor financial management of the previous government of Nawaz Sharif as it failed to overcome the rising imports, the market experts said.
Pak Rupee appreciated by 3.2 per cent against the dollar in interbank while 5-6 per cent in the open currency market during the last three weeks. The Pak-rupee had touched Rs130 in the open currency market while Rs129 in the interbank market in July this year.
The rupee had been devalued by 20 per cent during the last fiscal year. The central bank devalued Pak Rupee by 5 per cent on December 8, 2017, to Rs110, 4.5 per cent to Rs115 on March 20, 2018, and 5 per cent to Rs121. During the last 10 years, Pak Rupee has devalued annually by around 5 per cent, said a Topline Securities report.
The current A/C deficit is widening only because of rising country’s imports bills and lower inflows of foreign direct investment (FDI).
Despite rising CAD, the foreign exchange (FX) reserves of the State Bank have remained under pressure and down to $10,152 billion last Thursday, which covers only about 1.5 months of imports bills. Total reserves of the country are at $16.712 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.
The SBP had also imposed a 100 per cent cash margin on the import of 131 items of goods to overcome the rising imports of luxurious goods and also taken some hard decision to control the dollar rates in Interbank.
The State Bank is persistently facing payment pressure of international donor agencies including the International Monetary Fund (IMF).
The dollar is being traded at Rs123.94 for buying and Rs124.04 in the interbank market today.