The country’s current account balance has finally set in the red zone witnessing a deficit of $ 700 million during the first eight months of the current fiscal year, spanning over July-February FY13.
It was last month only when the country’s economic managers were taking comfort from a $ 62 million surplus in the dollar-hungry country’s current account balance during July-January FY13.
Despite this negative turn the country’s C/A has taken, the situation on the Balance of Payment side still seems far from alarming. This is because unlike this year, the corresponding months of last financial year had seen a huge gap of $ 3.235 billion in the country’s current account.
The country’s ever-broadening trade balance showed a negative improvement by reducing to $10.170 billion during the review period against $ 10.981 billion in correspondent months of FY12.
Both the exports and imports remained subdued with the country dispatching goods worth $16.047 billion to the outside world and importing commodities to the tune of $26.217 billion. Last year the country’s exports and imports had stood at $16.195 billion and $24.176 billion, respectively.
The disbursements by foreign debtors and donors made to the country showed improvement as against last year’s $1.252 billion Islamabad received $1.385 billion this year. Of the total, $ 1.129 billion came to the country under the head of long-term project and program loans.
The Islamic Development Bank extended $ 256 million to Pakistan as a short term loan.
The Pakistanis working overseas also did well during these months by remitting $ 9.235 billion back to their families. This was compared to $ 8.593 billion of last year. While all the above heads set in the positive zones and are therefore less likely to cause the $ 700 million deficit, the draining of millions of dollars on account of the heavy IMF repayments seems to be the major contributable factor.
According to the State Bank, from July 2012 to the 26th of last month Pakistan had “successfully” repaid $ 3.232 billion to the IMF under the Stand-By Arrangement. The balance amount to be cleared until September 2015 stands at SDR 3.239 billion.
The next, 11th, installment worth SDR 258.4million is due to be paid in May.
The economic managers have been very repetitive in reminding the inquisitive media that all the IMF repayments have been budgeted and, therefore, pose no risk to stability on macroeconomic level.
Governor State Bank Yaseen Anwar, in a recent media show, said Pakistan still had enough dollar reserves to clear its international obligation and that the huge dollar repayments being made to the IMF were already budgeted in fiscal terms.
Conceding engagement with the IMF, Anwar said it was however Islamabad’s prerogative to go for a fresh bail out package. “Yes, we are engaged with the IMF, but it is our decision to go for a loan package when the time is right,” he said.
The SBP governor said though not perfect, economic challenges in the country were “manageable”.
One may also pin hope in the ongoing honeymoon period between Pakistan and the United States, Pakistan’s largest military and civilian funders, as the appointment of pro-Pakistan John Carry as a Secretary of State by the White House may lead to the release of more war reimbursements under the head of Coalition Support Fund in the days ahead.
