Balance of payments falls 58% to $1.4bn

Attention: open in a new window. PDFPrintE-mail

KARACHI: The country’s balance of payments went down by 57.72 percent to $1.418 billion in first 10 months of the current fiscal year 2012-13 as compared to $3.354 billion in the same period last year.


However, it’s slightly up by 13 percent as compared to $1.251 billion in July-March 2012-13, data released by State Bank of Pakistan (SBP) said here on Friday.


The trade balance remained negative in this period and touched $12.541 billion. The country’s exports stood at $20.501 billion against its total 10 months import of $33.042 billion, the SBP data said. “The country’s trade deficit is declining slowly and the inflow is thin,” an analyst of a brokerage house said. Except for machinery and petroleum groups, imports of all other major groups recorded a fall, he added.


The exports in July to April increased by $31 million, while the imports declined by $295 million in the said period.


According to the data, the country has received workers’ remittances of $11.570 billion in the said period.


The election period is over and now it is clear that Nawaz Sharif of Pakistan Muslim League-Nawaz will make the new government in the capital, Punjab and Balochistan. It’s being hoped that the new government of Nawaz would approach the International Monetary Fund (IMF) to overcome the critical balance of payments situation.


The SBP foreign exchange reserves have declined to $6.525 billion as against $8.7 billion at the end of January 2013, mainly due to debt payments. The SBP had highlighted two main challenges for monetary policy - to manage the balance of payments position and to contain the possible increase in inflation. However, the analyst said the SBP did not mention in its report how it will manage the balance of payments.


“The country has total import payments of two to three months and if the incoming government does not make a proper decision, the country might face big global trade challenges,” the analyst said.


Pakistan will have to repay around $530 million before June 30, 2013. It will repay $390 million to IMF under Stand-by Arrangement (SBA) loan facility by May 28, 2013. Another repayment of $140 million to IMF under SBA has to be made by June 28, 2013.


Because of these payments, the forex reserves of the country are under pressure and dollar is not available in the open currency market. It’s the 14th instalment in a row as Pakistan has already paid around $3.43 billion against the total fund of $7.80 billion.


Pakistan got a loan of $7.80 billion in March 2008 when the dollar-rupee value was around Rs 64 in open market.


The government should bring under control the continuous borrowing from SBP, and make efforts to raise foreign direct investment in the next six months besides controlling poor law and order situation, the analyst said.


The new government would have to take tougher steps to bring the economic conditions of the country in shape. According to media news, the caretaker government had reached a three-point understanding with the IMF for $5 billion Extended Finance Facility programme to ease up balance of payments difficulties that the new elected government might face in its honeymoon period.

Courtesy:  Daily Times

Forex open Market rates & comments Archive

Login Form