Following the healthy rise in exports, the country's services trade deficit has shrunk by 64 percent to $1.13 billion in fiscal year 2012-2013 (FY13). According to State Bank of Pakistan (SBP), exports of services sector continued to post strong growth supported by arrival of Coalition Support Fund (CSF) payments. Services exports, breaching the last fiscal year's level, have reached all time high level of $6.6 billion mark at the end of last fiscal year.
Services sector exports have gone up by 31 percent during the last fiscal year as compared to corresponding year. The services sector exports surged to $6.619 billion mark in FY13 as against $5.035 billion in FY13, depicting an increase of $1.584 billion.
The SBP revealed that with the support of rising exports the country's services trade deficit also declined by 64 percent or $2.053 billion during last fiscal year. Services trade posted a deficit of $1.139 billion in FY13 as compared to $3.19 billion in FY12.
Analysts said that services trade statistics were very encouraging as exports are rising and import are on decline. However, they said, current decline in deficit is because of Coalition Support Fund (CSF) payments by the US and deficit may increase during ongoing fiscal year.
During FY12-13, the country received $1.8 billion on account of CSF in two instalments. First payment of $1.118 billion arrived in August, while on December 28, 2012, Pakistan received another tranche of CSF worth $688 million. With arrival of these inflows services trade is presenting an improved picture, they mentioned.
"Surplus trade balance will also help to curtail the current account deficit, which is already a threat to the country's depleting forex reserves," they added.
The detail analysis revealed that during the period under review services imports registered a slight decline of 6 percent. Service sector imports fell by $469 million to $7.758 billion in FY13 as compared to $8.227 billion in FY12.
Month on Month basis, services sector trade has posted a deficit of $119 million with $470 million exports and $589 million imports during June 2013.
The country service exports inflows comprise $3.436 billion on account of government services, $1.226 million on account of transportation services, $298 million from travel, $509 million from communication, $29 million from construction services, $294 million through information technology, $42 million from insurance sector and some $57 million arrived on account of financial services during FY13.
While, transportation payments stood at $3.141 billion, travel $1.232 billion, communication $205 million, construction $10 million, insurance $255 million, financial sector $120 million and computer and information services payments stood at $203 million during the period under review. In addition, some $142 million was paid on account of royalties and $881 million on account of government services.