| GEO Business|
Current account deficit narrows down to $545m
| Updated at: 1037 PST, Wednesday, October 20, 2010|
KARACHI: The country’s current account deficit narrowed down to $545 million during the first quarter (July-September) of FY11 from $587 million in the corresponding quarter last year, the central bank said on Tuesday.
The current account for the month of September has shown surplus of $447 million from the deficit of $372 million during the previous month, the State Bank of Pakistan (SBP) said.
Analysts said that the ease in the current account deficit was due to inflows in the current transfers and fall in the trade deficit. The trade deficit in September stood at $1.16 billion against the previous month’s deficit of $1.238 billion.
The analysts also attributed ease to inflows of home remittances growth, which stood at $2.646 billion in July-September against $2.331 billion during the same quarter last year.
Pakistan’s current account deficit came down to $3.495 billion in FY10 from $9.261 billion in FY09.
The current account deficit for the current fiscal year is projected at $5.9 billion due to floods devastation and its impact on trade with higher imports and slower exports.
“The post-flood current account deficit would be $1.24 billion, higher than the government’s actual estimates for the current fiscal year at $4.624 billion,” according to the International Monetary Fund (IMF).
The gap in the balance of payments is expected to rise in the pre-flood situation. “The current account deficit is expected to increase in 2010/11 even before the floods because of higher imports and slower growth in remittances,” the IMF said.
The natural calamity, however, poses larger current account deficit with imports to rise in the short run as food and other basic goods will need to be sourced from abroad and capital equipment imports will increase for reconstruction.