With $160 million surplus current account deficit down to $2.154 billion in December

The country''s current account balance has become positive for the first time during the current fiscal year and registered a surplus of $160 million in December 2011 as compared to over two billion dollars deficit in first five months of fiscal year 2011-12.
Economists say that surplus current account is a positive indication for the country''s economy, which is already facing many hurdles in foreign inflows. "We believe that continued decline in the current account deficit would also help to keep the exchange rate stable, besides strengthening the foreign exchange reserves," they said.
They said that all-time high remittances from overseas Pakistanis during December 2011 largely contributed to post a surplus current account. With an increase of 26 percent, remittances reached $1.085 billion in December 2011, compared to $863 million in December 2010. "Pakistan was compelled to join IMF program in November 2009 to avoid default and it is necessary to continue this positive trend otherwise Pakistan may face some problems on foreign payment", they said.
According to State Bank of Pakistan (SBP), the country''s current account balance posted a surplus of $160 million in December 2011 as compared to $688 million deficit in November 2011. The account had posted a cumulative deficit of $2.314 billion during July-November However, December has been a single month during the current fiscal year, in which current account posted a surplus balance.
With the current surplus, the country''s cumulative current account deficit declined to $2.154 billion in July-December of fiscal year 2012 from $2.314 billion in July-November of 2012. Earlier, the country had witnessed a deficit of $75 million in July 2011, $115 million in Aug, $1.02 billion in September, $287 million in October and some $688 million deficit in November 2011.
However, year on year basis, the country''s current account balance posted a deficit of $2.154 billion during first half of current fiscal year compared with only $8 million in same period of last fiscal year, depicting an increase of 26825 percent or $2.146 billion. Cumulative deficit of trade, services and income stood at $10.519 billion as against current account transfers of $8.414 billion.
The country''s overall goods imports stood at $19.74 billion and exports at $12.12 billion with a trade deficit of $7.61 billion during first five months of fiscal year 2012, previously was stood at $5.77 billion along with $16.88 billion imports and $11.11 billion exports during the same period of fiscal year 2011.
Services sector deficit mounted by 32 percent to $1.304 billion with $2.586 billion exports and $3.89 billion imports in July-December of current fiscal year 2011 as compared to a deficit of $349 million in corresponding period of last fiscal year. Income sector outflows stood at $2.084 billion and inflows at $488 million, depicting a deficit of $1.59 billion during the period under review. After a gap of six years, the country''s current account balance had become positive and surplus by $542 million in fiscal year 2010-11 (FY11) compared with $3.94 billion deficit in fiscal year 2010 primarily driven by all time high inflows of home remittances and exports.