RIZWAN BHATTI

KARACHI: Services trade performance continued to deteriorate as Coalition Support Fund (CSF) inflows saw slow arrivals this year. The services trade deficit posted a notable increase of 176 percent during the first nine months of FY14.

Analysts said the country received a less amount on account of CSF during this fiscal year compared to pervious year which resulted in higher services trade deficit. “Pakistan received an amount of some $650 million on account of CSF during FY14 as compared to $1.8 billion in FY13,” said Khurram Shahzad Chief Investment Officer at Lakson Investments.

He said higher services trade deficit is directly hurting the CA balance as it is a major contributor to rising current account deficit, which has crossed $2 billion mark at end of March 2014. “The federal government is making serious efforts towards timely arrival of CSF and another tranche of some $300 million which are expected before June this year,” he added.

The State Bank of Pakistan said services trade deficit posted an increase of 176 percent during first nine months of this fiscal year. The deficit rose to $1.948 billion in July-March of FY14 compared to $705 million in the corresponding period of last fiscal year, depicting an increase of $1.243 billion.

A detailed analysis of services trade reveals that during the period under review exports and imports of services trade are on the decline. Services sector exports registered a decline of 32 percent or $1.714 billion. With current decline, the services sector exports fell to $3.724 billion in first nine months of this fiscal year compared to $5.438 billion in the same period of last fiscal year.

Services sector imports plunged by 8 percent or $471 million to $5.672 billion during July-March of FY14 against imports of $6.143 billion in the same period of FY13. Month-on-month basis, services trade posted a deficit of $253 million in March 2014 with $455 million exports and $708 million imports. Economists said during the period under review, Pakistan earned some $1.3 billion on account of government services and this amount is over 50 percent less than previous year, in which the country earned some $2.9 billion on this account.

During the period under review, the country earned some $900 million on account of transport, some $213 million from travel, $372 million from communication, $65 million from insurance, $239 million from computer and information technology and an amount of $19 million through construction services.

Similarly, Pakistan paid some $2.729 million on account of transportation, $767 million for travel, $133 million for construction activities, $179 million for insurance services, $85 million for royalties and license fee and $126 million for computer and information services during July-March of FY14.