Pakistan's current account deficit has posted a decline of some 2 billion dollar (21 percent) during the first nine months of the current fiscal year, mainly due to the higher home remittances and sharp decline in the trade deficit. "Decrease in the current account deficit has occurred due to rising home remittances, decline in imports and trade deficit, besides aggressive performance of services sector," analysts said.
Strengthening the current account would also help stabilise the exchange rate to a reasonable level and further build the country's forex reserves, they added. They said that month-on-month basis current account deficit is also narrowing, which reflects that the country's current account deficit would be around 8-8.5 billion dollar by the end of June 2009.
"The improving current account situation also indicates an overall economic stability and we are expecting further stability in the near future," they added. Official statistics revealed on Friday that the country's current account deficit has declined by 1.982 billion dollar during the July-March of fiscal year 2008-09.
With this decrease, the country's overall current account deficit has narrowed down to 7.645 billion dollar in the first nine months as compared to some 9.627 billion dollar in the same period of last fiscal year. The country had also registered a slight current account deficit of some 172 million dollar during the March 2009.
In the earlier five months of the current fiscal year 2009, current account was constantly on the rise with an average deficit of some 1.36 billion per month on the back of high imports, slowdown of exports and slow foreign inflows.
However, since the last three months things are improving and after a long gap the current account deficit - a major economic indicator, is presenting a positive indication. With this decline in the current account deficit, the average deficit has also plunged. The average monthly current account deficit till February 2009 was over one billion dollar. However, after the March statistics it has declined to 955 million dollar.
Trade and services sector have presented a significant improvement and contributed major share in narrowing current account deficit, while income deficit is still witnessing an upward trend.
Services deficit has declined by some 38 percent during the first nine months of the current fiscal year. Services sector deficit stood at 2.954 billion dollar with 2.633 billion dollar exports and 5.587 billion dollar imports in July-March of the current fiscal year as compared to a deficit of 4.782 billion dollar with 2.384 billion dollar exports and 7.166 billion dollar export in the corresponding period of last fiscal year.
Overall deficit including goods, services and income stood at 15.776 billion dollar against the current account transfers of 8.227 billion dollar during the July-Mach of fiscal year 2008-09. The country's overall goods imports stood at 24 billion dollar and exports at 14.46 billion dollar with a trade deficit of 9.51 billion dollar during the first nine months of the current fiscal year.