Still in deficit

March 9, 2017

This refers to the news report, ‘Workers’ remittances rise to $10.3bn’ (February 11). A country’s current account is a component of the balance of payments that includes balance on exports/imports, services, net income abroad and net transfers. Workers’ remittances are recorded in net transfers. A surplus for one of these categories does not necessarily mean current account surplus unless the country has surplus for other accounts as well.
The SBP summary of balance of payments for January 19, 2015 shows deficit in all other categories except for remittances. Although, workers’ remittances stood at $10.3 billion for the first seven months of 2014-15, showing an increase of 14.6 percent, Pakistan still has trade deficit of $12 billion for the period July-Dec 2014, which means the current account is still in deficit. With a weaker export base and more than $65 billion in external liabilities, the country cannot rely merely on such insignificant inflows. Pakistan will have to make pragmatic efforts to augment its export base.
Muhammad Akram