Country’s current account deficit reduces by 64%

KARACHI: The current account deficit of the country has been declined by 64 percent on the end of a 21 percent reduction in the import bill.

According to the data issued by the State Bank of Pakistan, the current account deficit for July-September showed a decline of $2.739bn.

The reduced current account deficit is a positive indication for the government, which is struggling with slow economic growth and high inflation.

However, the country’s exports did not record any noticeable increase during the period despite the massive decline in rupee’s value.

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The government has been successful in bringing down the deficit from a historic high of $19.897 billion in the fiscal year 2018 to $13.830 billion in the fiscal year 2019.

The government has been facing a major challenge in the form of controlling the huge debt servicing, which makes up for the major part of the current account deficit.

In the fiscal year 2019, the current account deficit was $13.8 billion whereas the debt servicing, in the same fiscal year, was $11.588bn.

In the ongoing fiscal year, the government has borrowed additional funds from donors, commercial banks and friendly countries, which would certainly increase the total size of debt servicing.

The debt servicing increased by 54pc in the fiscal year 2019 compared to the previous year reflecting the size and cost of commercial borrowings. The debt servicing in the fiscal year 2018 was at $7.495bn.