KARACHI, March 19: Current account deficit of the country is taking a difficult shape as it is rising each month, reaching minus 1.9 per cent of the GDP during July-February 2012.
In terms of dollar, the deficit rose to $2.952 billion while it was just $194 million or 0.1pc of the GDP in the same period last year, said a State Bank report issued on Monday.
The higher deficit is a clear indication of further increase in the payment problem on external front as country failed to capitalise the projected targets for dollar inflows.
The payment problem is taking a solid shape, particularly in the wake of increasing trade deficit and higher payments as debt-servicing.
At the same time, expectations for inflows as coalition support fund, loans from IMF and other donors remained unfulfilled.
An analysis shows the trade deficit is the real source of higher current account deficit despite the fact that remittances kept on
increasing to reduce pressure on the external front.
The eight-month trade deficit rose by 10.515 billion which was 43 per cent ($3.166 billion) higher than the same period of last year.
This increase is almost equal to current account deficit.
Workers’ remittances during the same period rose 23 per cent ($1.63 billion) to record $8.593 billion. It helped cover the widening current account deficit.
Analysts see a grim situation, particularly in the wake of rising tension in the oil region which supported oil market speculators to raise prices despite no supply constraints.
So far the country has paid $9.873 billion for oil import which is 34 per cent higher than the same period previous year. The increase accounts for $2.516 billion which is slightly less than the entire current account deficit of eight months.
It means the higher oil price is the real cause of increasing current account deficit.
The State Bank reported that the deficit fell to $260 million in February as against $364 million in January.
Analysts pin hopes in improving Pakistan’s military relations with the US which may result in release of over $2 billion as Coalition Support Fund.
Some government representatives have recently hinted that supply of goods to Nato in Afghanistan could be restored in the next two to four weeks.
However, it is felt that despite restoration of CSF, increasing oil prices would continue to put pressure on current account deficit.