KARACHI: Total current account deficit at the end of March has risen to $ 2.173 billion as compared $ 1.2 billion during the same period last fiscal year, according to State Bank’ weekly report.
The current account deficit has risen for the third consecutive quarter of the current fiscal year. The trend could create problems as government has been borrowing from international market to meet external obligations.
During the period from January to March, the deficit was $ 416 million while in the previous quarter i.e. October to December it was $ 551 million. The first quarter’s deficit was $ 1.2 billion.
The current account was in the surplus in February 2014 by $ 167 million, but it could not make the third quarter results in surplus. Exporters believe that depreciation of dollar by 10 per cent in a few months could also cause drop in exports and the last quarter could reflect the impact of dollar deprecation.
However, details of the current account deficit explain that real difference was noted in balance on trade in services while imbalance on goods in trade slightly increased.
Although deficit on goods in trade was too big compared to services, the current account deficit reflects the change in services exports.
According to the SBP export of services fell to $ 3.722 billion during first nine months of this fiscal year compared to $ 5.432 billion in the corresponding period of last fiscal year. The deficit on goods in trade during the nine months was $ 12.081 billion, which increased by $ 496 million compared to last fiscal year.
Analysts have been warning that higher current account deficit would nullify the entire efforts to improve borrowing for reserves and stabilise the exchange rate.
The finance minister recently said that the country’s foreign exchange reserves rose to $11.67bn after inflows of $2bn from Eurobond.
Bankers said the deficit of $2 to $3bn at the end of current fiscal year would not jolt reserves of the country or the exchange rate, but decline in deficit would certainly help country improve its ability to pay back foreign obligations.
