42 percent decline in services sector deficit in 10 months

[LahoreEstate]

RIZWAN BHATTI
KARACHI (May 24 2009): Services sector trade deficit shrank by 42 percent during the current fiscal year mainly due to rising exports and low imports. Although the services sector has posted a deficit of over 3 billion dollars during ten months (July-April) of current fiscal year, the overall services sector performance improved as imports and deficit had been on decline and exports increased gradually.

The deficit amounted to 3.22 billion dollars in services trade during the period under review due to high payments on account of transportation, travel and government service. However, the deficit amounted to 2.27 billion dollars, or 42 percent, less than 5.49 billion dollars of same period of last fiscal year.

Economists said that declining services sector deficit would help to further curtail the current account deficit, which has been a major challenge for the policy markers and compelled Pakistan to re-join International Monetary Fund program.

"Overall performance of services during the current fiscal has been better than previous years and country's ailing economy needs such trend," they said. The State Bank on Saturday said that the country's services sector exports had surged by 9.13 percent to 2.915 billion dollars during July-April as compared to 2.671 billion dollars of last year.

In another major achievement the services sector imports plunged by 25 percent, to 6.137 billion dollars in ten months as against 8.165 billion dollars of last year. Deficit of transport sector largely contributed to overall deficit, which stood at 1.95 billion dollars as part of 3.22 billion dollars of the current fiscal year.

Rising imports of transportation were major cause of high deficit in this sector, as exports stood at one billion dollars against imports of 2.95 billion dollars. Services deficit in April 2009 stood at 256.634 million dollars with 288.337 million dollars exports and 544.971 million dollars imports.

The country earned 186 million dollars on account of travel services against payments of 906 million dollars. Communication sector exports stood at 110 million dollars against imports of 115 million dollars. Exports of insurance sector reached 48 million dollars against imports of 110 million dollars. Earning from financial sector stood at 57 million dollars against payments of 151 million dollars.

Royalties and licence fee payments reached 80 million dollars against earnings of 12 million dollars, and government services exports stood at 927 million dollars against imports of 283 million dollars during the period under review.

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