Services sector suffers $2.7 billion deficit

[LahoreEstate]

RIZWAN BHATTI
KARACHI (March 21 2009): The country had to face a deficit of 2.7 billion dollars in services trade during eight months (July-Feb) of the current fiscal year (2008-09) mainly due to high payments on account of transportation, travels and government service. However, the deficit was about 36 percent less than in the same period of last fiscal year, mainly due to the high exports and low imports.

Economists said that declining services sector deficit would help to further curtail the current account deficit, which is a major challenge for the policy markers. They said that overall performance of services is better than previous years, as exports are rising and imports are on decline, and economy needs to continue same trend in the near future.

Due to the huge services imports, the government was also compelled to spend more foreign exchange. However, with some improvement in services trade, the exchange rate would be stable in the domestic market. The State Bank of Pakistan (SBP) on Friday said that the countrys services sector performance had become better, as overall services imports and deficit were on decline, while exports of service sector were on the rise during the current fiscal year.

Services sector exports in eight months stood at 2.382 billion dollars against imports of 5.095 billion dollars, depicting a deficit of 2.713 billion dollars during the period under review. However, this is much lower than 4.237 billion dollars of the same period of the last fiscal year.

Exports of services sector surged by 13.15 percent to 2.832 billion dollars over 2.105 billion dollars of the same period of last fiscal year. The services sector imports plunged by 20 percent to 5.095 billion dollars from 6.342 billion dollar of corresponding period of last fiscal year.

Transport sector largely contributed to overall deficit with 1.625 billion dollars from 794 million dollar exports and 2.419 billion dollar imports. Meanwhile, services deficit in February 2009 stood at 248 million dollars with 469 million dollars imports and 221 million dollars exports.

Pakistan earned 148 million dollars on account of travel services, 62 million dollars in communication, 23 million dollars in insurance, and 39 million dollar from financial sector eight months.

Travel payments stood at 823 million dollars, communication 93 million dollars, construction 47 million dollars, insurance 87 million dollars, financial sector 135 million dollars, and computer and information sector imports stood at 74 million dollars during this period. Similarly, royalties and licence fee payments reached 67 million dollars against earnings of 10 million dollars and government services payments stood at 204 million dollars over the receipts of 825 million dollars during eight months.

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