KARACHI: Current account deficit in the first 10 months – July-April – of the current fiscal year rose to $2.162 billion, reflecting a large trade gap compared to $1.574bn during the corresponding period last year.
According to the State Bank report, the foreign exchange reserves of the country have significantly increased over the past six months, eroding any possibility of default on external payments. However, the current account deficit is still a problem for the country which has increased its reserves with massive borrowing from debt market as well as bilateral sources.
The government recently borrowed $2bn through the sale of Eurobond which helped it build its reserves but could not reduce the deficit. It may liquidate the positive impact of Eurobond.
The imbalance of trade in goods during this period was higher than last year’s as it rose to minus $13.161bn compared to minus $12.822bn during the same period of last year.
This widening trade deficit is the real threat which appears as current account deficit. Despite ever increasing remittances, which rose by 11.45 per cent year on year to $12.9bn during the 10-month period, the current account deficit is critical for the economy.
The State Bank said the current account deficit in April this year was minus $55 million. Analysts believe that the deficit of $2bn was enough to raise the negative impact of borrowed reserves.
