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KARACHI -(Dow Jones)- Pakistan's current account deficit in the first nine months of the current fiscal year narrowed 67.8% from a year earlier to $2.7 billion, helped by lower imports and rising remittances from workers abroad.
The current account deficit in the first nine months of the last fiscal year that ended June 30, 2009, totaled $8.4 billion, a statement posted on the Web site of the central bank said Monday.
Imports in the nine months of this fiscal year fell 8.6% to $22.4 billion, while remittances grew 14% to $6.5 billion from $5.7 billion.
The current account deficit for the last fiscal year was $9.3 billion.
-By Haris Zamir, Dow Jones Newswires; 91-11-43563301; abhrajit.gangopadhyay@ dowjones.com
Pakistan July-March Current Account Deficit Shrinks 68% On Year
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KARACHI: Current account deficit of the country dropped to $2.702 billion during the first three quarters of current fiscal year from $8.379 billion in the same period of last fiscal year, registering a fall of 67.46 percent.
Drop in deficits on trade of goods and services caused this fall in current account deficit. Deficit in trade of goods came down to $8.024 billion from $10.262 billion, a decrease of 21.80 percent. Deficit on trade of goods and services combined plunged to $9.931 billion from $13.213 billion, a difference of 24.83 percent. Trade deficit fell mainly because of decrease in spending on oil imports by the country.
The increasing remittances too contributed in narrowing down the current account deficit. Money sent home by overseas Pakistanis rose to $6.551 billion in the first nine months of 2009-10 from $5.658 billion in the same period of last fiscal year.
Tariq Ali, an economist at Arif Habib Investments, said the fall in trade deficit was the main reason for the drop in current account deficit. He said trade deficit, which had stood at $2.9 billion in the October-December quarter, came down to $2.2 billion in the January-March quarter. Remittances fell slightly on quarterly basis, but on a year-on-year basis they had risen impressively, he said. Besides, Pakistan had to make lower payments on account of interest on foreign debt. Interest payments dropped to $1.073 billion during the period under review from $1.480 billion in the same period of last year. Repatriation of profit and dividend was also lower at $419 million, down from $563 million.
The drop in current account deficit is the only good news among the host of bad news about the economy, said another analyst. He, however, said the lower import bill reflected subdued economic activities.
Different institutions including the State Bank of Pakistan are expecting Pakistan to post a modest three percent growth in economy in the current fiscal year.
Pakistan averted a default on foreign payments at the end of 2008 with the help of IMF, which extended a loan under an standby agreement. IMF had approved a $7.2 billion for the country in November 2008, which was augmented to over $11 billion in August 2009.
But IMF has been reluctant to approve the next tranche for the country owing to hurdles in enactment of value added tax law. The government of Sindh has refused to cooperate with the federal government over enactment of VAT law, arguing that the federal government did not have the right to collect taxes on services. Federal Board of Revenue on the other hand argues that only one agency should collect value added tax and that it alone had the capacity and expertise to collect the tax.
Daily Times - Leading News Resource of Pakistan
The current account deficit in the first nine months of the last fiscal year that ended June 30, 2009, totaled $8.4 billion, a statement posted on the Web site of the central bank said Monday.
Imports in the nine months of this fiscal year fell 8.6% to $22.4 billion, while remittances grew 14% to $6.5 billion from $5.7 billion.
The current account deficit for the last fiscal year was $9.3 billion.
-By Haris Zamir, Dow Jones Newswires; 91-11-43563301; abhrajit.gangopadhyay@ dowjones.com
Pakistan July-March Current Account Deficit Shrinks 68% On Year
____________________________________________________
KARACHI: Current account deficit of the country dropped to $2.702 billion during the first three quarters of current fiscal year from $8.379 billion in the same period of last fiscal year, registering a fall of 67.46 percent.
Drop in deficits on trade of goods and services caused this fall in current account deficit. Deficit in trade of goods came down to $8.024 billion from $10.262 billion, a decrease of 21.80 percent. Deficit on trade of goods and services combined plunged to $9.931 billion from $13.213 billion, a difference of 24.83 percent. Trade deficit fell mainly because of decrease in spending on oil imports by the country.
The increasing remittances too contributed in narrowing down the current account deficit. Money sent home by overseas Pakistanis rose to $6.551 billion in the first nine months of 2009-10 from $5.658 billion in the same period of last fiscal year.
Tariq Ali, an economist at Arif Habib Investments, said the fall in trade deficit was the main reason for the drop in current account deficit. He said trade deficit, which had stood at $2.9 billion in the October-December quarter, came down to $2.2 billion in the January-March quarter. Remittances fell slightly on quarterly basis, but on a year-on-year basis they had risen impressively, he said. Besides, Pakistan had to make lower payments on account of interest on foreign debt. Interest payments dropped to $1.073 billion during the period under review from $1.480 billion in the same period of last year. Repatriation of profit and dividend was also lower at $419 million, down from $563 million.
The drop in current account deficit is the only good news among the host of bad news about the economy, said another analyst. He, however, said the lower import bill reflected subdued economic activities.
Different institutions including the State Bank of Pakistan are expecting Pakistan to post a modest three percent growth in economy in the current fiscal year.
Pakistan averted a default on foreign payments at the end of 2008 with the help of IMF, which extended a loan under an standby agreement. IMF had approved a $7.2 billion for the country in November 2008, which was augmented to over $11 billion in August 2009.
But IMF has been reluctant to approve the next tranche for the country owing to hurdles in enactment of value added tax law. The government of Sindh has refused to cooperate with the federal government over enactment of VAT law, arguing that the federal government did not have the right to collect taxes on services. Federal Board of Revenue on the other hand argues that only one agency should collect value added tax and that it alone had the capacity and expertise to collect the tax.
Daily Times - Leading News Resource of Pakistan
