Current Account Deficit soars by 204 Percent

Current Account deficit has increased to 204% during the ten months of current fiscal year. The SBP revealed the Current Account Balance numbers on Wednesday which stood at $(7,247) million. In comparison with numbers previous year, which stood at $(2,378) million, the rise was incredibly high.

Although, experts expect the numbers to reach up to $9billion by the end of current fiscal year as trade deficit has continued to grow during the last ten months. In comparison to previous month, Current Account was almost double. It reached to $1.13 billion against the March’s numbers of $546 million.

The numbers show a debt-ridden economy and have a potential to result in a catastrophe. With imminent payables due to IMF in the coming fiscal year, these numbers only add on to worries of sitting government which has to face polls next year. Furthermore, the exchange rate stability is being maintained by borrowing from international lenders.

The GDP targets were also missed by Government for last 4 years. The impetus to economy and exports that was supposed to happen has not witnessed due to abysmal performance of industrial sector. In the current GDP numbers, the most contributing sectors to the economy were services and agriculture. Despite numerous efforts taken by the Government, it has not been able to gather enough momentum from production sector. Adding to these worries is the Transporter’s strike; with some experts estimating has cost 400 billion to the economy. The cost will continue to increase if no immediate solution is found.

With trade deficit increasing, the government is losing its ability to justify itself as the polls near with every month. Furthermore, the declining remittances have also added to the worries. Pakistan has historically been heavily reliant on foreign remittances to bridge the current account deficit.