Current account turns to surplus

[farhan_9909]

KARACHI: The previous month saw current account switch to surplus for the first time this fiscal year, helping the country to reduce the mounting fear about widening deficit during the preceding two months.

The State Bank reported on Monday that the current account was in $3-million surplus in September. Although the amount is meagre, its impact was significant in terms of signal it gives since the current account deficit widened to $1.372 billion during July-August period, almost half of $2.971bn deficit during entire FY14.

However, the current account deficit remained at $1.33bn for the first quarter (July-September) of this fiscal year. The deficit in the same quarter of last year was $1.268bn.

The details showed that the balance of trade in services has improved significantly as the deficit in the first quarter reduced to $447m, exactly half of $894m during the year-ago period.

The improvement in both the current account and balance of trade in services was due to almost 100 per cent increase in export of services from Pakistan. The services export during the quarter jumped to $1.712bn from $992m.

The fact that the services imports did not rise on a par with exports also helped in reducing trade deficit in services.

The country has been struggling to improve its balance of trade but the exports showed less improvement while the imports kept on rising.

Overall exports during the July-September period dropped to $5.960bn from $6.275bn a year ago. By contrast, the imports increased to $11.822bn from $10.576bn.

Experts say that the negotiations with the IMF could help in releasing two tranches amounting to $1.1bn by the end of second quarter (October-December). This will improve the balance sheet of the country.

However, the low foreign investment, higher repatriation of dollars in terms of profits and dividends, and huge debt servicing will continue to keep pressure on the country’s ability to meet its foreign obligations.

Published in Dawn, October 21st , 2014

Current account turns to surplus - Newspaper - DAWN.COM

 

[Somras]

good

 

[Jungibaaz]

That is some very welcome news.

 

[Donatello]

Only if jahil feudals of Sindh and idiots of Imran khan could see the potential of Pakistan if stability is achieved......

 

[Bilal.]

Only if jahil feudals of Sindh and idiots of Imran khan could see the potential of Pakistan if stability is achieved......

The surplus has a lot to do with 19.5% increase in remittences in the first quarter which in turn has a lot to do with the 2 eids. Other than that the exports have declined, foreign investment has declined and imports have risen. Till now the government has achieved nothing.

 

[Donatello]

The surplus has a lot to do with 19.5% increase in remittences in the first quarter which in turn has a lot to do with the 2 eids. Other than that the exports have declined, foreign investment has declined and imports have risen. Till now the government has achieved nothing.

Just when there was a slight hint, like candle light at the end of the tunnel, stupid khan started his BS.
If those Chinese loans would have been signed, you would have started seeing money flowing in.

But alas, most people cannot see further than their nose.

 

[Bilal.]

Just when there was a slight hint, like candle light at the end of the tunnel, stupid khan started his BS.
If those Chinese loans would have been signed, you would have started seeing money flowing in.

But alas, most people cannot see further than their nose.

State to state commitments are not so flimsy that they will get cancelled just because their presidents visit got delayed. It will happen in a month or two anyways which is not such a significant delay. But as some reports point out that the interest rate on those loans are really 7-8% then we really need to rethink whether we would be able to afford 50 billion dollars at rate.

 

[Donatello]

State to state commitments are not so flimsy that they will get cancelled just because their presidents visit got delayed. It will happen in a month or two anyways which is not such a significant delay. But as some reports point out that the interest rate on those loans are really 7-8% then we really need to rethink whether we would be able to afford 50 billion dollars at rate.

It's not 7-8%, i can guarantee you that. I know how? My dad works in Pakistan's power industry, and since they have been the ones negotiating power plant package with Chinese for Pakistani IPPs, the interest rate is much lower than that. Heck, it is not even decided yet, because China has large state owned banks specifically for such foreign investments. But the Chinese are really angry at the lack of movement on Pakistani side. BTW, Pakistan took loans for JF-17 project as well. Power plants, highways and dams are much more important than JF-17s. They are both pillars of what we call national security.

 

[Bilal.]

It's not 7-8%, i can guarantee you that. I know how? My dad works in Pakistan's power industry, and since they have been the ones negotiating power plant package with Chinese for Pakistani IPPs, the interest rate is much lower than that. Heck, it is not even decided yet, because China has large state owned banks specifically for such foreign investments. But the Chinese are really angry at the lack of movement on Pakistani side. BTW, Pakistan took loans for JF-17 project as well. Power plants, highways and dams are much more important than JF-17s. They are both pillars of what we call national security.

Most definitely loans for infrastructure are more important than JFT but while the ones taken for JFT are in tune of a billion dollar it's 50 billion we are talking about here. But as you said that these loans are also soft in their terms then I would be glad if the agreement is signed quickly. But I would be more glad if the government is able to raise tax to GDP ratio which at present is at a meagre 8.9%(which is beyond pathetic)... I mean all the efforts seem to be on getting loans and financing and not on real reforms.

 

[Donatello]

Most definitely loans for infrastructure are more important than JFT but while the ones taken for JFT are in tune of a billion dollar it's 50 billion we are talking about here. But as you said that these loans are also soft in their terms then I would be glad if the agreement is signed quickly. But I would be more glad if the government is able to raise tax to GDP ratio which at present is at a meagre 8.9%(which is beyond pathetic)... I mean all the efforts seem to be on getting loans and financing and not on real reforms.

Agreed, we need some serious fiscal shake up.

 

[Bilal.]

With crude oil down by ~22% can we expect have a current account surplus this year? And equally important, how long is the crude oil price expected to stay this low?

Will OPEC or shale producers budge soon in this game of chicken they are playing with each other?

@niaz @HRK @farhan_9909

 

[Dr. Strangelove]

Will OPEC or shale producers budge soon in this game of chicken they are playing with each other?

@niaz @HRK @farhan_9909

opec will be fine for a couple of years ruskies are the reason for this

 

[Bilal.]

opec will be fine for a couple of years ruskies are the reason for this

Not really, turns out it's a Saudi led OPEC attempt to take down US shale producers.

U.S. shale producers stare down Saudis amid oil price war | Financial Post

opec will be fine for a couple of years ruskies are the reason for this

Not really, turns out it's a Saudi led OPEC attempt to take down US shale producers.

U.S. shale producers stare down Saudis amid oil price war | Financial Post

 

[HRK]

With crude oil down by ~22% can we expect have a current account surplus this year? And equally important, how long is the crude oil price expected to stay this low?

Will OPEC or shale producers budge soon in this game of chicken they are playing with each other?

@niaz @HRK @farhan_9909

Bhai "TAIL DEKO TAIL KI DHAR DEKO" ....

 

[ziaulislam]

Poor performance of current government has nothing to do with imran khan , but lack reforms in power sector, worsening collections and increase in receivables.

in fact the situation would have been disastrous had the government not been lucky in sense of rapid fall of oil prices, lowest in decade!