Current account deficit narrows in January

[LahoreEstate]

RIZWAN BHATTI
KARACHI (February 18 2009): The country's current account deficit reduced by 25 percent during January 2009 due to the rise in services exports and decline in global commodity prices. State Bank of Pakistan statistics on Tuesday showed that current account deficit reduced to $411 million in January 2009 against $551 million in December 2008, depicting a decline of $140 million in a single month.

However, overall current account deficit increased by 1.58 percent to $7.758 billion during seven months of current fiscal year as compared to $7.633 billion of last fiscal year. SBP figures showed that despite a deficit of $411 million in January, the overall balance was positive as $565 million had been inducted in foreign exchange reserves. Services sector presented a significant improvement and contributed major share in the depleting current account deficit, while there is upward trend in goods and income deficit.

Services sector deficit decline by 38 percent to $2.471 billion with $2.161 billion exports and $4.632 billion imports in July-January of current fiscal year as compared to $3.968 billion, with $5.58 billion imports and $1.614 billion export in corresponding period of last fiscal year.

"The improving current account situation also indicates overall economic stability, and we are expecting further stability in the near future", economists said. With the current declining trend, the IMF's target of current account deficit would be easily met and declining trend would also help to get second instalment of IMF standby loan of $7.1 billion on time, they said.

Overall deficit including goods, services and income stood at $13.635 billion against current account transfers of $5.961 billion during July-January of fiscal year 2008-09. Goods imports stood at around $20 billion and exports at $11.465 billion with a trade deficit of $8.533 billion against $7.955 billion of same period of last fiscal year.

Income deficit surged by 21 percent, to $2.631 billion as compared to $2.180 billion of last fiscal year. Income from abroad stood at 4 678 million in July-January period as compared to payments of $3.309 billion. Statistics show current account deficit without official transfers climbed to $7.867 billion as compared to $7.668 billion during last fiscal year.

http://brecorder.com/index.php?id=891585...=&supDate=