ISLAMABAD – Pakistan’s current account deficit (CAD) in the first quarterof the current fiscal year (FY20) declined by a huge 64pc mainly due to a21pc reduction in the imports bill, a private media outlet reportedlink.
The central bank’s latest data showed the current account deficit forJuly-September FY20 clocked in at $1.548 billion compared to $4.287 billionin the same period last fiscal year; a decline of $2.739 billion.
According to the data, the large decline in imports was the real forcebehind the 64pc reduction in the deficit, whereas exports of goods andservices during the quarter increased by a meagre 1.38pc or $99 million.The exports services during the quarter clocked in at $7.259 billioncompared to $7.160 billion in the same period last fiscal year.
Contrary to exports, the country’s imports fell by 19pc to $13.461 billion.On one hand, this massive decline has helped the government reduce thecurrent account deficit, whereas on the other, it has also slowed down theoverall economic activity in the country.
Furthermore, with a lacklustre increase in exports, the government may findit difficult to meet the current account deficit.
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The government was successful in bringing down the deficit from a historichigh of $19.897 billion in FY18 to $13.830 billion in FY19.
The government has been facing major challenge in the form of controllingthe huge debt servicing, which makes up for the major chunk of currentaccount deficit. In FY19, the CAD was $13.8bn whereas the debt servicing,in the same fiscal year, was $11.588 billion.
