Green light for current account balance


Pakistan’s dollar-hungry current account balance continued to remain in the green zone during July-October FY13 by registering a surplus of $ 258 million.
This surplus amounted to $ 432 million during first quarter of FY13, July-Sep, owing to what the official and unofficial quarters agree, receipts of war reimbursements from the United States in early August this year.
On August 1, 2012, the Islamabad’s non-Nato allies in Washington had released to the cash-strapped Pakistan some $1.118 billion under the long-denied Coalition Support Fund (CSF) after a months-long strain in bilateral ties relaxed through an on-and-off process of negotiations between the two countries on civilian, military and intelligence level.
The inflows, the SBP chief spokesman Syed Wasimuddin had confirmed, had put the country’s current account balance into a surplus since July. The central bank Monday reported that during the corresponding period of last year, July-Oct FY12, the country’s current account balance had marked a deficit of $ 1.655 billion.
In percentage terms, the surplus constitutes 0.3 percent of the country’s gross domestic product (GDP) accounting for $ 82.232 billion. This is against a deficit of 2.1 percent last year.
Senior analysts like Khurram Schehzad had also seconded the central bank’s view saying the positive was attributable mainly to the dollar inflows on account of CSF and Kerry Lugar from the US. The receipts under KLA have been meager with Washington reported to have transferred only Rs 20.356 billion during FY12 against a projected receipt of Rs 34.164 billion. Under the KLA, Pakistan has the US’s word for receiving a civilian aid of $ 7.5 billion till 2014, $ 1.5 billion per annum.
However, the funds transfer under CSF augured well for the funds-starved Pakistan which, in FY12, had braved a current account deficit of over $ 4 billion, pushing the economic managers closer once again to a fresh IMF bailout package. During the period under review, the country’s trade balance remained subdued and registered a deficit of $ 5 billion against last year’s $ 5.398 billion. A break up of trade deficit shows that during the review months the country exported goods worth $ 8.210 billion compared to $ 8.105 billion in July-Oct of FY12. Compared with last year’s $13.503 billion, the imports totaled at $ 13.210 billion.
Overseas Pakistanis also performed well by remitting $ 4.964 billion during the review period as against $ 4.315 billion last year. The State Bank says that the country on average receives over a billion dollars every month from Pakistanis working abroad. The disbursements from the foreign financers, another noteworthy indicator on the current account balance list, stayed however in the red zone by remaining confined to long-term project loans standing at $ 382 million. Last year, disbursements under the same head were recorded at $ 519 million.
However, despite these positives the analysts believe that the economic managers have still a lot to worry about owing to the current poor dollar inflows into the country specially the foreign investment.