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The Country Economy

Autor:   •  March 8, 2011  •  Essay  •  449 Words (2 Pages)  •  1,489 Views

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The country's economic front witnessed significant easing evident from a decline in current account deficit which stood at US$81 million in first seven months of current fiscal, representing a meager 2.6% of the total deficit during the corresponding period previous year. Strong surge in remittances, healthy exports and relatively lower imports helped curtail the current account deficit during the period which was US$3.05 billion in the same period last fiscal year. The improvements in these key indicators did not only boosted the gross foreign exchange reserves to a record level of US$17.44 billion but it kept the exchange rate stable thereby, indirectly, providing improved purchasing power of rupee and lower import bill. The PKR-USD parity has witnessed little change over the past 12 months representing signs of economic stability.

On the other side, the rampant government borrowing remains the key cause of concern for economic managers of country. The government is relying on funding from central bank in order to support its burgeoning budgetary deficit, causing a surge in broad money supply and eventually, paving way for hyperinflation. The government, in order to curtail the escalating inflationary pressures, has resorted to borrowing from banks which stand at around PKR394.35 billion during the first seven months of current fiscal year, up 61.7% when compared to the borrowing in the same period previous year. The rise in government borrowing from commercial banks is keeping the yields on treasury bills upwards.

Nonetheless, the country's external front boasts a strong position with foreign exchange reserves over US$17.4 billion, remittances at a whopping US$6.131 billion for the first seven months of FY2011 and a growth of over 22% in country's exports aggregating to an impressive US$13.28 billion thereby offering tremendous growth opportunities to offshore investors who can rely on stable external account and the country's


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