The reduction in current account deficit is mainly driven by import compression and a healthy growth of some 8.5 percent in workers' remittances. Overseas Pakistani workers have remitted $17.9 billion in July to April of FY19 compared with $16.482 billion received during the same period in the preceding year FY18.
Despite the some improvement in the current account and a noticeable increase in official bilateral inflows, the financing of the current account deficit is remained challenging, that forced the government to obtain financing from friendly countries. The federal government has borrowed some $3 billion from Saudi Arabia, $2 billion from UAE and $2 billion from China to support the external account and build the depleting foreign exchange reserves. In addition, Pakistan and International Monetary Fund (IMF) have reached an agreement for $6 billion loan program to support the external account.
Economists said that there is need to generate more resources of foreign inflows to meet the rising current account deficit. The State Bank of Pakistan (SBP) on Tuesday reported that during the period under review, cumulative deficit of goods, service and income was declined by 10 percent. The combined deficit of goods, service and income stood at $31.609 billion in first ten months of current fiscal year compared to $35.083 billion in same period of last fiscal year.
With $20 billion exports and $ 44.033 billion imports, the country's goods deficit stood at $23.934 billion in July-April of FY19 as against $ 25.813 billion trade deficit in corresponding period of last fiscal year. During the period under review, services trade deficit was $3.217 billion with $4.453 billion exports and $7.67 billion imports.
Similarly, deficit of income sector also witnessed some growth. Income sector deficit stood at $4.458 billion as its payments were $5 billion as against receipts of $564 million. Month on Month basis, during April 2019, current account deficit was $1.24 billion as against $871 million in March 2019.