Thursday, May 22, 2008
KARACHI: Pakistan’s current account deficit widened sharply in the first 10 months of the current fiscal year, underlining the pressures on the economy, and for some analysts, increasing the need for tighter fiscal and monetary policy.
Analysts say pressure on the current account is mainly due to rising commodity prices, including oil and food, and a short-term solution could be to reduce domestic demand through fiscal and monetary policy.
The deficit swelled to $11.586 billion, the State Bank of Pakistan (SBP) said on its website on Wednesday. That compared with $6.628 billion in the same period last year. The 10-month deficit is equivalent to about 7.3 per cent of the gross domestic product, compared with a full-year target of 4.8 per cent.
“The current account deficit has now reached an unsustainable level,” said Asif Qureshi, head of research at Invisor Securities Ltd. “The solution is that authorities need to further tighten fiscal and monetary policy.”
Pakistan’s trade deficit widened to $2.29 billion in April from $1.1 billion in April last year, while for the first 10 months of the fiscal year ending June 30, it widened by nearly 51 per cent to $16.8 billion.
The consumer price index in April rose by 17.21 per cent from a year earlier, the highest in more than three decades. Analysts say the full-year current account deficit could widen to as much as 9 per cent of GDP.
http://thenews.jang.com.pk/daily_detail.asp?id=113964