According to a report of the State Bank of Pakistan, the current account deficit has increased by 91 percent to $2.601 billion in the first five months of the current fiscal year.The deficit reached 120 percent to $839 million in November as compared to the previous year in the backdrop of increasing imports and decreasing exports. The country has failed to attract foreign direct investment which is drastically decreased during the recent months. Pakistan received only $460 million and that also from China as part of the ongoing projects. On the contrary, foreign investment in India and Bangladesh have increased many fold during the period. The remittances sent by Pakistani expatriates have also been falling as most of the workers are returning home due to recession in Saudi Arabia and elsewhere in the world. The government will have to adopt proactive approach to deal with the emerging situation as the burden of loans is growing, trade deficit are increasing and industrial surplus is absent.The policymakers are unprepared to keep pace with the changing circumstances. When government increases its expenditures but fails to generate resources, an economic disaster is imminent. The bank report says that the current account deficit reflects the country’s growing trade gap with various countries of the world as the gulf between money-in and money-out is increasing.
According to news reports, the foreign direct investment has decreased by a whopping 45 percent while the trade deficit in terms of goods and services have crossed $10 billion mark, creating an alarming situation for the nation. The government is struggling to maintain its foreign exchange reserves through artificial means as the economy is under pressure due to falling exports. The government ministers were thumping their chest on the so-called economic stability and strong rupee value against dollar in the country. However, the rupee value is continuously diluting in the open market and the government is looking for a loan programme to stabilize the rupee as well as maintain foreign exchange reserves at a certain level. At a time dollar has crossed Rs108 in the open market amid rising demand and short supply, the government still has time to do some homework to give direction to the economy. The ministers should stop lip-service and put all their energies to streamline the affairs of their respective ministries.
The financial situation will not improve until the policymakers shun their lethargic attitude and start programmes to create trade surplus in the country. And trade surplus is directly linked with energy supply and tax relief. It is yet to be seen how the government manages the whole scheme of things.
