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KARACHI: The current account deficit widened by 148.5 per cent to an all-time high of $12.09 billion for 2016-17, the State Bank of Pakistan (SBP) reported on Wednesday.
The deficit was $4.86bn in the preceding fiscal year. The balance on trade in goods jumped to a deficit of $26.8bn compared to $19.3bn in 2015-16.
The government has failed to improve exports. Instead of growing foreign sales, Pakistan’s exports have been declining for the last four years. This is making it more difficult for the government to contain the rapid fall in foreign exchange reserves.
Rupee to come under more pressure
The balance on goods and services registered a deficit of $30.5bn compared to $22.7bn in 2015-16.
The growing current account deficit has practically neutralised the positive impact of about $19bn remittances sent by overseas Pakistanis. For the first time in more than a decade, remittances declined on a year-on-year basis in 2016-17.
Data shows unchecked imports proved disastrous for the external sector of the economy. The deficit hurts the country’s ability to sell bonds in the international market. The government has been planning to sell euro bonds. But the weakness on the external front with a $12.1bn current account deficit means that the government is unlikely to get a favourable rate of return.
Published in Dawn, July 20th, 2017
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Comments (38) Closed
Jul 20, 2017 08:22am
So this the performance of the present governnment, the Finance Minister is so proud of.
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Jul 20, 2017 08:49am
Have good ties with india and your all problems will be solved, until india starts buying your things , nothing gonna happen
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Jul 20, 2017 09:23am
And after all this fools give suggestions to India about economy... India is lowering it deficit every year
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Jul 20, 2017 09:29am
Still waiting for CPEC wonders to happen
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Jul 20, 2017 10:04am
Exports have been declining and interest and debt payments will rise to US $ 4.5 Billion per year due to CPEC. You must thank the Chinese brothers now for this gesture.
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Jul 20, 2017 10:05am
The whole Govt. for the last 15 months is busy protecting the PM in Panama case. No Finance Policy and No Foreign Policy, everything go to hell, PM is more sacred than the country.
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Jul 20, 2017 10:09am
Apart from declining exports, the artificial control of the CURRENCY is also the root cause of this widening CA Deficit.
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Jul 20, 2017 10:11am
Now to whom Finance Minister will blame for rupee devaluation!
After four years of ruling, this is the performance of the government.
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Jul 20, 2017 10:14am
Get your priorities right....
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Jul 20, 2017 10:18am
China and CPEC will soon make deficit a thing of past...
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Jul 20, 2017 10:33am
CPEC, the game changer, could lower the deficit.
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Jul 20, 2017 10:33am
For India it's under 2 % still govt trying to cut it down.
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Jul 20, 2017 10:34am
Just a matter of time. Once CPEC fully operational deficit will turn into surplus.
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Jul 20, 2017 10:35am
remember cpec is a flag ship project of OBOR and china will do every thing to make it succesfull , imports are high due to imports of heavy machinery for CPEC and related project KSE is also improving ,overall its no that bad , remittances is also going to improve
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Jul 20, 2017 10:42am
drop in remmittances from overseas pakistanis is a big worry , instead of useless shopping abroad Overseas pakistanis must fullfill their national Duty this country has given them so much now its time to pay back
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Jul 20, 2017 10:42am
drop in remmittances from overseas pakistanis is a big worry , instead of useless shopping abroad Overseas pakistanis must fullfill their national Duty this country has given them so much now its time to pay back
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Jul 20, 2017 10:52am
We should concentrate on kashmir issue, don't highlight this minor issues, kashmir is the main problem for us.
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Jul 20, 2017 11:05am
@Ruchimah All those who are hoping that CPEC will help in longterm will understand their blunder. Simple fact is dollar denominated loans with more than 2 to 3% interest for govt related projects are counter productive.
in local pkr currency, that 2% USD rate workout as 22% due to n number of factors. imagine after paying gauranteed rate of interest 22%, what will be left as business profits.
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Jul 20, 2017 11:11am
@Asif Ali : We should concentrate on Kashmir issue..
Yes, Put all the country's time, money and resources to concentrate on Kashmir. Everything else is irrelevant for progress of the common man.
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Jul 20, 2017 11:17am
excellent acceleration.. CPEC will be last nail.
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Jul 20, 2017 11:27am
@Asif Ali totally agree. When you have so many issues that really matter concentrate on the matter that has put you in the situation you are in.
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Jul 20, 2017 11:44am
Dear PAK Govt.,
Focus on Remittances from Overseas Pakistanis since they are your "Family" bread earners.
Imagine, if they take their funds somewhere else in the world then you would suffer more severely than the current deficit position which shall ultimately impact "severely" on resident citizens due to their consumption within country and somehow "mildly" on overseas residents because of their consumption outside Pakistan; all due to money-supply mechanism.
Also changing consumer behavior internationally which enforces consumers to 'Spend-More' and 'Save- Less' shall obviously trigger a deep impact on International Remittances to Pakistan, in addition to top-up flavor of WHT on certain transactions.
Think-before-Act.
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Jul 20, 2017 12:01pm
@Asif Ali Yep, try the age old "it is easier to make everyone poor".
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Jul 20, 2017 12:32pm
very good achievement for pak government
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Jul 20, 2017 12:42pm
@Gaurav
India already import from Pakistan. India gave MFN status to Pakistan almost 2 decades back.
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Jul 20, 2017 12:43pm
Pak, concentrate on education. Improve your education system and have more eng speaking population. Pak can be a BPO/IT capital which will provide employment to a large population as in India. We share the same blood if India can be successful in IT so can Pak. Forget Kashmir for 10 years and concentrate on education. All the best. Love your India.
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Jul 20, 2017 12:55pm
@Sudhir S S "Still waiting for CPEC wonders to happen"
Keep waiting brother. Not going to happen in the life time of anyone who is alive today.
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Jul 20, 2017 01:37pm
@Junaid Khan A big joke. Non resident Pakistanis are not doing huge purchases. They are trying to make ends meet and remitting to family. How will they invest when Pak rupee is sliding continuously.
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Jul 20, 2017 01:37pm
@India "very good achievement for pak government"
Friend, if you think this is good, you must wait and have patience. This is just the beginning, the tip of the iceberg. The best has yet to come.
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Jul 20, 2017 02:08pm
After CPEC is complete, current account deficit, savings account deficit, fixed deposit deficit, and everything else will be zero.
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Jul 20, 2017 02:09pm
@common sense How will the remittances improve? Most foreign workers of Pakistani nationals are working in Saudi and UAE for construction works. As oil prices reduced, respective countries have stopped their construction works as a result, workers are finding it hard to even survive, how will they remit more money in coming days.
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Jul 20, 2017 02:09pm
This is as a result of escalated banking regulations and enhanced public taxation that suppressed productivity decreasing the economic output.
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Jul 20, 2017 02:26pm
""But the weakness on the external front with a $12.1bn current account deficit means that the government is unlikely to get a favourable rate of return.""
How do you get " rate of return " on borrowing by raising Euro Bond ? Will anybody please explain ?
In 1990s India had to pledge Gold to get IMF / World Bank assistance in similar situation.
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Jul 20, 2017 03:19pm
Jet Airways, India's second-largest airline by market share, has asked dozens of its junior-ranking pilots to accept 30-50 per cent pay cuts, or quit, as it moves to bring down its costs.
Jet Airways, which has the highest cost structure among all the major private-sector carriers in India, did not immediately respond to a request for comment.
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Jul 20, 2017 03:23pm
Wipro chairman Azim Premji has expressed optimism on the prospects of the Indian IT industry for the current fiscal despite global economic volatility, as the sector continues to bet on growing demand for digital technologies.
He said the company’s social sphere activities are not just limited to India alone but also to the overseas markets where it has its presence. He cited the example of providing science scholarships in US as a case in point. In the US geography, Wipro has already announced that locals now form over 50 per cent of its US workforce.
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Jul 20, 2017 04:57pm
@K Alam learned from China. How to control currency mislead the world ?
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Jul 20, 2017 05:05pm
@LILLY moreover your China friend is taking jobs from your Pakistani living in developed countries.
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Jul 21, 2017 06:50pm
CPEC will cure not only deficits but also all illness, unemployment, water shortage, power shortage, etc.
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