Services sectors trade posts $75 million surplus

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Followed by Coalition Support Fund (CSF) payment, the country''s services sector trade posted $75 million surplus in the first seven months of current fiscal year 2012-2013 (FY13).

The services sector''s trade was facing high deficit during the same period of last fiscal year, 2011-2012, owing to sluggish exports'' growth and slow foreign inflows particularly CFS, which were withheld by the US after tension with Pakistan.

The US released two tranches of the much-awaited CSF payments, when Pakistan resumed Nato supplies. These inflows have supported the services sector''s trade to post a surplus account during current fiscal year.

Since July 2012, the country has received an amount of $1.8 billion on account of CSF from the US. First tranche of $1.118 billion was received in August 2012 and another payment of $688 million in December 2012. Following these payments services'' sector trade is presenting an improved picture and its deficit has turned into surplus.

According to the State Bank of Pakistan (SBP) services'' sector trade posted a surplus of some $75 million along $4.5 billion exports and $4.4 billion imports during July-January of FY13 as against a deficit of $1.664 billion in corresponding period of last fiscal year, when its exports were $3 billion and imports $4.6 billion.

The detailed analysis revealed that followed by CSF inflows services sector exports are on the rise and with a healthy increase of 50 percent or $1.523 billion, it reached $4.53 billion mark in July-January of FY13 as compared to $3.007 billion in the same period of FY12. Services sector imports have registered a decline of 5 percent during the period under review. Overall services imports decreased to $4.455 billion during first seven months of FY13 against the imports of $4.671 billion in corresponding period of last fiscal year, depicting a decline of $216 million.

"Surplus services trade is a positive indication for external account as the higher current account deficit is already a concern for the policy makers," analysts said. This will help in reducing the balance of payment deficit, besides injecting million of dollars in the depleting foreign exchange reserves.

The country''s foreign exchange reserves are already on decline due to debt and current account payments. With a fall of over $2 billion, the country''s total liquid foreign reserves have decline to $13.058 billion in the third week of February 2013 from $15.236 billion in June last year.

They said, however, high payments on account transportation, travel, financial services, information technology and government services were still a threat for improved services trade as previously these heads were responsible for a higher services trade deficit. "Although, services trade has performed well in initial months, but it is believed that this trend will not continue in future," they added.

Month on Month basis, the services trade has registered a deficit of $181 million as services exports stood at $365 million against $546 million imports.

Courtesy: Business Recorder

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