The current account (CA) deficit witnessed a jump of 17 percent in fiscal year 2014 to $ 2.9 billion as against $ 2.5 billion during last year and significantly increased from budgeted estimate of $ 2.4 billion for 2014.
According to economic observers, the rise in deficit was primarily ascribed to 72 percent YoY increase in services deficit.
Although, services debit decreased by $ 0.41 billion but at the same time services credit decreased more, by $ 1.5 billion, taking the overall service deficit to $ 2.5 billion. The services deficit increased mainly on account of less Coalition Support Fund receipts as compared to last year.
The receipts during FY14 stood at $ 0.68 billion as compared to $1.8 billion during same period last year. The income deficit has increased by 6 percent YoY to $ 3.9 billion versus $ 3.7 billion during last year.
Workers’ remittances from abroad stood at $ 15.8 billion in FY14; up by 14 percent YoY which helped narrowing the trade deficit during the period under review.
On QoQ basis, CA deficit dropped by enormous 51 percent to $ 32 million in 4Q’14 whereas the same was $678mn in 3Q’14. Remittances growth of 12%QoQ to $4.2 billion and 12%QoQ decline in services deficit and 16%MoM fall in income deficit were the key reasons behind this deficit plummet.
During FY14 trade deficit depicted an increase of 8%YoY to $16.7 billion mainly on account of 4%YoY jump in imports. The imports settled at $41.8 billion in FY14 as against $40.2 billion in FY13. Although exports jumped by 1%YoY during the given period but more than offsetting impact of higher imports lead to a net trade deficit widening.
“For FY15, we expect the CA deficit would further expand,” the analysts said.
This, they anticipated, would be on the following grounds: 1) possibility of CSF receipts to remain below target 2) rise in oil import bill on higher int’l oil prices (Gulf and Russian tensions) and elevated FO import o keep power outages minimal 3) subdued textile exports (which contributes 60% of total exports) on poor gas and power supply to the sector.