Finance Division clarifies news about current account deficit

ISLAMABAD: Ministry of Finance on Friday said that the current account deficit was narrowed by 10.6 per cent in the first five months of the current fiscal year as compared to the corresponding period of last year.

Clarifying a news item on current account deficit, appeared in a section of press on December 20, it said the news does not reflect the factual position, a Finance Division press release said.

In this context, it explained that the current account deficit for the month of November 2018 stood at $1.25 billion which is showing an improvement of 28 per cent when compared to $1.74 billion in the month of November 2017.

It is also pertinent to mention that the current account deficit was over $2 billion in the month of April and May 2018.

However, current account deficit narrowed down 10.6 per cent to $6.1 billion in the first five months of the current financial year as compared to $6.8 billion of the same period of last year showing an improvement of 10.6 per cent.

This improvement in the current account deficit was mainly due to an increase in remittances by 12.6 per cent, deceleration in imports by 2.9 per cent which reflects the impact of policy measures taken by the government.

The growth in imports is mainly explained by the increase in oil imports bill because of high international oil prices, whereas non-oil imports contracted by 4 per cent during the first four months of the current fiscal year.

There was an expectation of receiving higher foreign inflows from both private and official sources during the remaining period of the current financial year. Furthermore recent bilateral arrangements including the deferred oil payment facility would also be available to the market from January 2019 onwards.

The projected decrease in the current account deficit, that could be further supported by the recent decline in international oil prices will bring stability in the foreign exchange market.

These developments would further stabilize the balance of payments and build foreign exchange reserves.

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