Current Account Deficit Declines By 4.5% in First Four Months of FY19

The current account deficit, one of the worrisome macroeconomic indicators, continued to decline for the second straight month as it showed a negative growth of 4.5 percent in the four months of the current financial year compared to the similar period last year. According to State Bank of Pakistan (SBP), the current account deficit stood at $4.84 billion during July to October 2019 as compared with $5.072 billion in the similar period last financial year, showing a negative difference of $232 million. The improvement in the current account deficit is mainly because of the foreign exchange receipts reported through remittances. During Jul-Oct, remittances grew to $7.42 billion with a growth of 15 percent or $976 million from last year’s same period. The balance of payment for goods and services show a growth of $146 million or 1.27 percent from last year, showing some control over the imports’ expenses. This happened because of the measures of the new government that imposed various duties and taxes on imports of various commodities aimed at controlling the imports bill. It is pertinent to mention here that current account deficit showed a negative growth of 2.5 percent in the first three months of FY19, which showed some stability in October to stand at negative 4.5 percent from the previous year. Pakistan’s new arrangements with Saudi Arabia and China are projected to control the deficit of current account in the next months, which will also ease off the pressure on foreign exchange reserves and the Rupee against Dollar subsequently.