KARACHI: Pakistan current account deficit has reached highest level ofhistory.
The current account deficit in the first 10 months of 2017-18 amounted to$14 billion, up 50 per cent from a year ago.
According to data released by the State Bank of Pakistan (SBP) on Friday,the gap was almost $2 billion in April. This was up by 61 per cent from thepreceding month, data showed.
Current account tracks a country’s overseas transactions, such as nettrade, earnings on cross-border investments and transfer payments.
Exports of goods amounted to $20.5 billion in July-April, up almost 13.3per cent from a year ago. But the corresponding rise in imports, which wereworth $45.5 billion, remained 17 per cent over the same period.
Exports have grown at a double-digit rate for the second time since2010-11. A recovery in advanced economies from the second half of 2017,with the United States, experiencing one of the fastest quarterly growthrates in the last three years, played a key role in the recent surge inexports. It boosted demand for products exported by emerging economies,including Pakistan, according to the SBP.
Exports incentives extended by the government in 2016-17 for promotingexports could also have started yielding results. For example, under theprime minister’s export package, the government allowed duty drawback of upto 7 per cent on the export of garments, home textiles, processed fabric,greige fabric and yarn manufacturing meant for export.
The government also announced exemptions for the textile industry on theimport of raw material (customs duty), and textile machinery (sales tax).In the presence of the GSP Plus status, these incentives may have catalysedexports, specifically to the European market, the SBP said.