According to the data released by the State Bank on Wednesday, current account deficit (CAD) decreased by another 31.7 per cent from July to June. The current account deficit is at $13.587 billion in this period whereas it was $19.897bn in the same period last year. It has now declined to 4.8pc of GDP for July to June this year as compared to 6.3pc last year.
The CAD has eroded much of the country’s foreign exchange reserves that forced the government to turn to the IMF bailout program.
Furthermore, the data showed exports have declined by $500 million from same period last year, arriving at $24.217bn whereas the numbers were $24.768bn last year. This was a 2.2pc deceleration in exports from a 12.6pc acceleration in their growth last year. Moreover, from this, $200mn reduction in exports came in the month of June compared to the same month in the previous financial year.
The imports have been declining at a more faster rate at 7.3pc or $4.156bn, arriving at $52.436 in July to June this year relative to $56.592bn in the same period last year. According to the State Bank’s third quarterly report which was released a few days ago, the major cause of decline in imports is due to the end of machinery imports as the early harvest phase of CPEC comes closer to an end. This is followed by the decline in oil prices and restrained imports of LNG for a some months when power generation was suppressed.
In services sector, balance of trade also showed a reduction $1.803bn, falling from $11.356bn to $9.55bn in the period being reported. Workers remittances increased by $1.928bn in the same period, arriving at $21.842bn for the period July to June 2019.
The capital account showed increasing external debt of the country where net liabilities arrived at $12.048bn this year where the same figure was $8.855bn for the period last year. Out of this figure, around $5.495bn were incurred by the central bank and $3.904bn by the central government. Unclassified liabilities were $2.016bn, whereas this figure was at $494 million in the same period last year.