The economic managers might be relieving from the fact that the start of Fiscal Year 2013-2014 has augured well for the dollar-hungry country in terms of current account balance that has witnessed a surplus of $ 46 million during first month of the year.
In percentage terms, the surplus translates into 0.2 percent of the country’s Gross Domestic Product (GDP). In July last year, this number stood at negative 2.1 percent of the GDP.
According to the central bank, the country’s current account during the month of July set in the green zone compared to a deficit of $ 427 million the country braved in the same month of FY13.
A monthly account also shows improvement in the current account which in June, last month of FY13, registered a deficit of $ 163 million. More comforting about the surplus is the fact that it is driven by the receipt of record remittances from Pakistanis working abroad. The State Bank data shows that during JulyFY14 the Pakistanis overseas remitted $ 1.404 billion that marked a historic increase in the country’s foreign exchange receipts under this head. In July last year the country had received $ 1.205 billion remittances. On month-on-month basis too the remittance inflows registered an increase of $ 239 million compared to $ 1.165 billion received in June 2013.
“The surplus is because of the historic worker remittances the country received in July,” an SBP spokesman told Pakistan Today.
Other heads like the trade deficit also witnessed a downward trend by accumulating to $ 1.180 billion compared to $ 1.390 billion gap the country had borne in the same month in FY13. During the first month, the exports swelled to $ 2.207 billion against $ 2.025 billion. On import front, the country purchased goods to the tune of $ 3.387 billion as against $ 3.415 billion in JulyFY13.
The balance of trade in services also ended positively as the deficit narrowed down to $ 163 million compared to last year’s $ 292 million. The overall balance of trade in goods and services shrank to $ 1.343 billion from $ 1.682 billion in JulyFY13. The disbursements by foreign lenders and donors remained subdued at $ 11 million compared to $ 74 million of last year. The $ 11 million received came to the country under the head of long-term loan. This positive trend in the country’s troubled balance of payment is a good omen for Islamabad whose foreign exchange reserves have contracted to an alarming level of $ 5 billion.
The newly-elected PML (N)-led government is seeking at least $ 11.3 billion from the multilateral agencies like International Monetary Fund (IMF), World Bank (WB), Asian Development Bank (ADB) and other bilateral lenders to be bailed out of the current financial strain where the country is on the brink of default on its international financial obligations. The IMF whereas has approved on official-level $ 5.3 billion for the cash-strapped Pakistan the WB and the ADB have agreed to finance the mega projects like Diamir Basha dam that would cost Islamabad around $ 14 billion.
