KARACHI, Oct 18: The current account for the first quarter of this financial year remained in surplus, but September results seem to have set a negative trend.

The State Bank reported on Thursday that July-September current account for FY-2013 was surplus with $432 million as against the August surplus of $1084 million.

In September, the current account was in deficit with 331 million that could lead to more deficit in the coming months as export growth is negative and imports are also falling, reflecting low economic growth.

The country is struggling to maintain foreign exchange reserves at a certain level that may help it avoid a default-like situation, but a continuous fall in the reserves has posed a threat to external account payments.

The country is paying back IMF and other loans while the government has, so far, failed to negotiate fresh loans to avoid a steep fall in foreign exchange reserves.

The foreign exchange reserves on Thursday stood at $14.319 billion, including State Bank’s reserves of $9.814 billion. The country mainly relies on export earnings, remittances from overseas Pakistanis, loans from donor agencies and aid from friendly countries for foreign exchange.

There is no hope for loans or aid while export growth was negative by 2.3 per cent during the first quarter. Export growth was more than 16 per cent during the same period last year.

The import growth also fell by 6 per cent during the three months, indicating poor economic growth that would further lead to low exports.

The other important factor that strengthens negative trend on the external front is the drastic fall in foreign direct investment while outflow of foreign investment is another factor that weakens country’s external account position.

The FDI fell by 67pc to just $87m in the first quarter.

Chances of improvement are slim and policy-makers seem to have lost direction as situation may push the country towards default.

Reports suggest that IMF is not willing to negotiate fresh loans as it has reservations about huge fiscal deficit of about 8 per cent of GDP and government’s borrowing trend shows that the deficit may cross even 8 per cent this year.