Daily Times

KARACHI: Pakistan’s external financial position continued to deteriorate in the backdrop of rising imports as the country’s current account deficit rose to $3.6 billion in the first three months of the current fiscal year, FY18, against $1.6 billion in the same period of last fiscal year, FY17.

Current account deficit during the month of September 2017 was reported at $956 million, as compared to $550 million of August 2017, mainly due to lower remittances. The current account deficit increased to 4.2 percent of gross domestic product (GDP).

Trade deficit during September 2017 remained flat MoM at $2.2 billion. Both exports and imports declined by 17% and 8% to $1.7 billion and $3.9 billion respectively. The decline was mainly due to lower number of working days as both Eid and Ashura holidays fell during the month.

Further, remittances saw steep MoM decline of 34% to $1.3 billion due to high base effect (higher remittances in August owing to Eid and lower number of working days in September), an analyst of Topline Securities commented.

The current account, broadest measure of trade, covers flows of goods, services and investment. The current account is an important indicator of economy’s health.

Foreign direct investment (FDI) was down 12.7% MoM to $205 million during September. However, during July-September 2017, FDI depicted encouraging growth, mainly due to Chinese investment in the backdrop of China-Pakistan Economic Corridor (CPEC). The overall investment in the first three months of current fiscal year, July- September 2017, increased by 56.3 percent to $661.9 million, from $423.3 million.

The overall balance of payment, which includes financial account and capital account, remained in the red, standing at $761 million in September 2017. Resultantly, foreign exchange reserves held by the State Bank of Pakistan in September 2017 stood at $13.9 billion, as compared to $14.7 billion in August 2017.

Published in Daily Times, October 21^st 2017.