Karachi - The Current Account (CA) deficit witnessed a jump of 17pc YOY in FY14 to $2.9 billion as against $2.5 billion during last year and significantly up from budgeted estimate of $2.4 billion for FY14.
The rise in deficit is primarily ascribed to 72pc YoY increase in services deficit. Although, services debit decreased by $0.41 billion but at the same time services credit decreased more, by $1.5 billion, taking the overall service deficit to $2.5 billion, states analyst at InvestCap Research. Services deficit increased mainly on account of less CSF (Coalition Support Fund) receipts as compared to last year. The receipts during FY14 stood at $0.68 billion as compared to $1.8 billion during same period last year. The income deficit has increased by 6pc YoY to $3.9 billion v/s $3.7 billion during last year. Workers’ remittances from abroad stood at $15.8 billion in FY14; up by 14pc YoY which helped narrowing the trade deficit during the period under review. On QoQ basis CA deficit dropped by enormous 51pc to $332 million in 4Q’14 whereas the same was $678 million in 3Q’14. Remittances growth of 12pc QoQ to $4.2 billion and 12pc QoQ decline in services deficit and 16pc MoM fall in income deficit were the key reasons behind this deficit plummet.
Meanwhile, trade deficit extends on higher imports. During FY14 trade deficit depicted an increase of 8pc YoY to $16.7 billion mainly on account of 4pc YoY jump in imports. The imports settled at $41.8 billion in FY14 as against $40.2 billion in FY13. Although exports jumped by 1pc YoY during the said period but more than offsetting impact of higher imports lead to a net trade deficit widening. Analysts expect for FY15, the CA deficit will further expand.