SBP lowers c/a deficit forecast

Wednesday, 13 January 2010 00:00

KARACHI : The State Bank of Pakistan (SBP) lowered on Tuesday its current account deficit forecast for the 2009/10 (July-June) fiscal year to between 3.7 percent and 4.7 percent of gross domestic product (GDP).

This compared with the State Bank previous estimate of between 4.7 percent and 5.2 percent. The current account deficit in the 2008/09 fiscal year was 5.3 percent of GDP. The State bank said while an improvement in the current account was expected, Pakistan s overall external account remains vulnerable . That was because of lower foreign investment and constrained access to the international debt market. In a report on the first quarter of the fiscal year, the central bank maintained a growth target of between 2.5 percent and 3.5 percent for the year. SBP estimates suggest that FY10 GDP growth is likely to be

around the annual target of 3.3 percent, the bank said. The major impetus for this growth is expected to come from the services sector, it added. The State bank said while there had been some recovery it was still cautious. Maintaining these gains and ensuring continuity of the nascent economic recover remains challenging for the remaining months of FY10, it said. Pakistan agreed in November 2008 to an International Monetary Fund emergency loan package of $7.6 billion to avert a balance of payments crisis. The loan was increased to $11.3 billion in July last year.

Courtesy : Business Recorder