Pakistan’s current account deficit in April widens by 43 per cent: SBP

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KARACHI: Pakistan’s current account deficit in April widened by 43 per cent, State Bank of Pakistan (SBP) announced on Wednesday.

In April the current account deficit stood at $1.241 billion compared to $871 million in March. The current account deficit in July to April for fiscal year 2019 amounted to $11.58 billion compared to $15.86 billion for the same period for fiscal year 2018. The current account deficit as of GDP stood around 4.8 per cent. Pakistan's central bank raised its key interest rate by 150 basis points to 12.25 percent on Monday, citing continuing inflationary pressures, a high fiscal deficit, and recent exchange rate depreciation. SBP said trends in government borrowing showed a widening fiscal deficit during the first nine months of the fiscal year. The central bank had previously raised the interest rate by 25 basis points to 10.75 per cent in its last monetary policy announced in March, but "a greater reliance on central bank financing of the [fiscal] deficit has acted to dilute the impact of previous monetary tightening". "Despite the improvement in the current account and a noticeable increase in official bilateral inflows, the financing of the current account deficit remained challenging. Consequently, reserves declined to US$ 8.8 billion as of 10th May 2019 from US$ 10.5 billion at end-March 2019," the SBP said on Monday.
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