Current Account Deficit Shrink to 31.7% according to new data.
- The current account deficit (CAD) shrank by 31.7% in the July to June period.
- Workers remittances rose by $1.928bncoming at $21.842bn for the period July to June 2019.
- Imports of goods shriveled to $4.156billion as compared to $56.592billion in the same period last year.
The current account deficit (CAD) shrank by 31.7% in July to June according to the latest data released by the State Bank.
In this period, the current account deficit came at $13.587 billion, whereas in the same period last year, it was $19.897billion. It has now fallen to 4.8% of GDP for July to June this year from 6.3% last year.
The current account deficit has been at the heart of the corrosion of the country’s foreign exchange reserves that eventually forced the government to seek an IMF bailout.
The deceleration in exports:
Furthermore, the data showed that exports of goods actually shrank by $500 million from the same period last year, coming in at $24.217billion where they were $24.768bn in the previous year.
This is a 2.2% deceleration in exports from 12.6% acceleration in their growth last year. Out of this, $200million decrease in exports of goods came in the month of June compared to the same month last year.
The contraction in Imports:
Imports of goods shriveled even faster at 7.3% or by $4.156billion, coming in at $52.436billin in July to June 2019 as compared to $56.592billion in the same period last year.
The contraction in Balance of trade in services:
The balance of trade in services showed a contraction of $1.803billion, entirely on the back of imports falling from $11.356billion to $9.55billion in the period being reported.
Remittances rise by $1.928bn:
In the same period, worker’s remittances rose by $1.928billion, coming in at $21.842billion for the period July to June 2019.
Rising external indebtedness of the country gained massive net liabilities of $12.048billion this year where the same figure was $8.855billion for the period last year.
In addition to this, $5.495billion was incurred by the central bank and $3.904billion by the central government. Unclassified liabilities were $2.016billion, which stood at $494 million last year.
The provision for the restoration of competitiveness through timely interventions by the government has started bearing fruit.
The government is hopeful that the current account deficit would be down to zero within two years if the monetary policy remains tight and exports are encouraged through new investments.