Services trade posts $90 million surplus in 1MFY16

Pakistan's services trade performed well and posted a $90 million surplus in July 2015 followed by Coalition Support Fund (CSF) inflows. Economists said that surplus services trade account can help in managing the external account in a proper manner with lower financing from domestic resources. "We believed that improved services trade statistics will help to curtail the current account deficit," they added.
The current account in the first month of this fiscal year (FY16) has already witnessed declining trend and was down by 80 percent to $159 million in July 2015. A surplus services trade has largely contributed to the lowering of current account deficit, they said. Economists said that still billions of dollars on account of CSF was pending with US and the federal government was expected to receive $1.6 billion under CSF payment during this fiscal year. They believed that realisation of this amount will definitely support the external sector.
According to State Bank of Pakistan (SBP), the country's services trade account is gradually improving as it has posted a $90 million surplus in July 2015 when compared to $383 million in July 2014. Detailed analysis revealed that during the period under review both components performed well as exports are on surge and imports witnessed downward trend.
Services exports have registered almost double growth during first month of this fiscal year. With an increase of 94 percent or $330 million, services exports reached $681 million mark in July 2015 compared to $351 million in same period of FY15. Exports include $337 million CSF inflow. Moreover, services sector imports posted a decline of 20 percent during the period under review. Services imports stood at $591 million in July 2015 against $734 million in corresponding period of last fiscal year, depicting a decrease of $143 million.
The country earned $63 million on account of transportation services, $27 million from travel, $64 million from telecommunication, $2 million from construction services, $8 million through financial services and some $400 million on account of government services during first month of FY16.
Meanwhile, transportation payments (imports) stood at $223 million, travel $102 million, telecommunication $43 million, financial sector $7 million, insurance $10 million and some $14 million were paid as charges for use of intellectual propriety. It may be mentioned here that the country's services trade deficit narrowed down slightly 5 percent to $2.5 billion during the last fiscal year (FY15), which was supported by higher Coalition Support Fund (CSF) inflows. Pakistan received an amount of $1.452 billion in FY15 from US on account of CSF compared to $1 billion in FY14.