CA posts $454 million deficit in July

The country's current account deficit rose by 263 percent during the first month of this fiscal year, mainly due to higher imports and slow foreign inflows. Economists said current account balance continues to deteriorate as goods trade deficit aggressively widened during July 2014 because of higher imports and decline in exports. They said deterioration in CA balance is not good for economy as the government is required to spend millions of dollars every month to finance this deficit.
In the past rising current account deficit forced Pakistan to rejoin the International Monetary Fund (IMF) programme, they added. "We believe that the government urgently required taking some steps to curtail the rising current account deficit," they added. The federal government has already estimated billions of dollars foreign inflows on account of privatisation, auction of dollar-denominated Sukuk and Eurobonds. The government can curtail the rising current account deficit with timely maturity of these expected inflows, they suggested.
The State Bank of Pakistan Friday revealed that CA balance posted $454 million deficit in July 2014 compared to $125 million in July 2013, depicting an increase of 263 percent or $329 million. Cumulative deficit of trade, services and income stood at $2.352 billion in the first month of FY15 against $1.703 billion in the same period last fiscal year.
During the period under review, goods trade deficit widened by 51 percent. The country's goods trade posted a deficit of $1.9 billion with $1.9 billion exports and $3.8 billion imports in July 2014 compared to $1.27 billion deficit with $2.19 billion exports and $3.44 billion imports in July 2013. Service sector deficit stood at $275 million with $328 million exports and $603 million imports in first month of FY15. Similarly, income deficit also mounted to $186 billion as its inflows stood at $40 million while outflows $226 million in July 2014.