Review of Pakistan’s Balance of Payments

July 2008 - June 2009

(Million US$)
Pakistan’s balance of 2008-09(Q UARTERLY) ANNUAL
payments showed a deficit ITEM Jul - Sep O ct - Dec Jan- Mar Apr - Jun 2008-09 2007-08
of $9,261 million in its Current Account Balance
-4,213 -3,625 -545 -878 -9,261 -13,874
current account balance Trade balance (Goods)
-4,519 -3,698 -2,045 -2,365 -12,627 -14,970
during 2008-09 as against Exports f.o.b.
5,711 4,379 4,231 4,800 19,121 20,427
a deficit of $13,874 million Imports f.o.b.
10,229 8,077 6,276 7,165 31,747 35,397
during 2007-08. There has
Services (net) -1,259 -1,080 -612 -430 -3,381 -6,457
been a significant decline
Income (net) -1,125 -1,260 -967 -1,055 -4,407 -3,923
of $4,613 million in
Current transfers (net) 2,690 2,413 3,079 2,972 11,154 11,476
current account deficit
General govt. 74 12 48 29 163 428
contributed by a decrease
Other sectors 2,616 2,401 3,031 2,943 10,991 11,048
of $2,343 million in trade
Capital account (net) 28 44 66 317 455 121
deficit, mainly due to
Financial account(net) 1,331 1,692 1,260 1,349 5,632 8,131
reduction of $3,650 million
Errors and Omissions (net) -238 226 -17 146 118 257
in import payments. A
O verall balance -3,091 -1,663 764 934 -3,056 -5,365
significant decline of
Reserves and related items 3,091 1,663 -764 -934 3,056 5,365
$3,076 million is also
Reserves assets 3,227 -1,429 -730 -1,703 -635 5,538
observed in services
Use of Fund Credits & Loans -36 2,992 -34 769 3,691 -173
deficit, however, an
Exceptional financing -100 100 0 0 0 0
increase of $484 million is
recorded in income deficit.
The capital and financial accounts showed a net inflow of $6,087 million reflecting a decrease of
$2,165 million over the previous year. There has been a decrease of $2,309 million in overall
deficit balance as compared with previous year. On quarterly basis, the overall balance registered
deficits of $3,091 million, $1,663 million in first and second quarter while surpluses of $764
million and $934 million were (Million US$)
witnessed in third and fourth 2008-09 (QUARTERLY) ANNUAL
quarter of FY09. ITEM Jul – Sep Oct -Dec Jan –Mar Apr -Jun 2008-09 2007-08
Trade Balance -4,518 -3,698 -2,045 -2,366 -12,627 -14,970
Exports (I+II+III) 5,711 4,379 4,231 4,799 19,121 20,427
Merchandise Trade I.Generalmerchandise exports (f.o.b.) 5,633 4,329 4,198 4,759 18,918 20,207
(a) Exchange record 5,226 4,039 4,035 4,101 17,401 18,123
During 2008-09 exports and i) F.o.b. & c.f. basis 5,342 4,264 4,121 4,160 17,887 18,483
imports of goods (general ii) Freight adjustment -117 -225 -86 -58 -486 -360
merchandise, repairs of goods (b) Timing adjustment -122 -147 -256 207 -318 577
and goods procured in ports by (c) Coverage adjustment 529 438 419 451 1,836 1,507
carriers) were $19,121 million II. Repairs of goods 0 2 2 2 7 2
and $31,747 million III.Goods procured in ports by carriers 79 48 31 38 196 218
respectively while the same Imports (I+II+III) 10,229 8,077 6,276 7,165 31,747 35,397
were $20,427 million and 1.General merchandise imports (f.o.b.) 10,124 7,964 6,215 7,107 31,410 35,027
$35,397million in 2007-08. (a) Exchange record 9,878 7,333 5,669 6,564 29,444 32,835
During current financial year, (b) Personal baggage, NRI & duty free shops 14 10 11 11 46 115
the trade deficit narrowed by (c) Foreign economic assistance 173 570 506 503 1,752 1,638
$2,343 million to reach (d) Others 59 50 29 30 168 439
$12,627 million as compared 11. Repairs of goods 11 31 14 26 82 115
during the preceding financial 111.Goods procured in ports by carriers 94 82 47 32 255 255

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 year. A decrease of $3,650 million or 10.3 per cent in imports contributed significantly in
narrowing trade gap.

The general merchandise transactions reported through banks (export receipts) on a mixed f.o.b and
c&f basis amounted to $17,887 (Million US$)
million as compared to $18,483 2008-09 (Q UARTERLY) ANNUAL
million during last fiscal year. CO MMO DITY Jul-Sep O ct-Dec Jan-Mar Apr-Jun 2008-09 2007-08

The general merchandise Cotton, clothing & textile group: 2,495 2,254 2,076 2,051 8,876 9,232
Cotton 907 871 771 740 3,289 3,505
exports at a uniform f.o.b are Other Made-up Textile Articles; Sets, Worn Clothin 691 648 600 608 2,547 2,388
arrived at by deducting freight Articles of Apparel & Clothing Accessories Knit/Cr 630 497 478 470 2,075 2,147
amounting to $486 million, Articles of Apparel/Clothing Acces not Knited /Cro 267 238 227 233 965 1,192
adding timing adjustments Cereals 585 374 397 429 1,785 1,597

(outstanding export bills) of - Mineral Fuels, Oils and Their Distillation Product 405 194 192 192 983 1,331
Salt, Sulfur, Earth's and Stones, Lime and Stone 183 163 156 158 660 393
$318 million and other exports Raw Hides, Skins and Leather other than Fur skins 154 122 102 103 483 566
of $1,836 million not covered Articles of Leather, Travel Goods and Handbags etc 127 108 100 82 416 418
through banking channel in Man-Made Staple Fibers 124 99 93 81 397 387
2008-09. T oys, Games and Sports Requisites; Parts & Acces. 91 64 69 80 304 341
Major commodities groups Plastics and Articles thereof 84 67 71 77 299 269

constituting 88 per cent of total Optical, Photographic, Measuring and Medical Inst. 71 59 66 72 268 261
Special Woven Fabrics,Tufted T extiles Fabrics,Lace 74 49 45 62 230 332
export receipts during FY09 in Fish and Crustaceans 29 48 51 52 180 167
descending order except others Carpets and other Textile Floor Coverings 51 43 40 35 170 241
group are shown in table along Edible Fruits and Nuts 43 30 55 34 161 170
with export receipts during Nuclear Reactors, Boilers, Machinery and Appliance 47 26 28 58 159 133
FY08. Sugars and Sugar Confectionery 57 32 41 27 157 168
Beverages, Spirits and Vinegar 52 34 29 29 144 135
The commodity-wise analysis
All Others 670 498 509 538 2,214 2,341
of export receipts revealed that Grand Total 5,342 4,264 4,121 4,160 17,887 18,483
cotton, clothing & textile and
the cereal group maintained their status of earning higher foreign exchange for the country in FY09
as they did in FY08.The former group fetched $8,876 million or 49.6 per cent of total export receipts
during the current year and the later contributed an amount of $1,785 or 9.9 per cent of total export
receipts to the country’s exchequer.

The country-wise comparison of export receipts by major countries during 2008-09 with 2007-08
is exhibited in Figure 1.

Country-wise pattern of export

receipts showed that USA and UAE
remained prominent trade partners
in terms of exports receipts
contributing to amounts of $3,540
million and $1,398 million
respectively during FY09. However,
Afghanistan replaced UK to become
third important trade partner in
terms of buying goods worth $976
million from Pakistan as UK
ordered goods valued $964 million.

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 (Million US$)
2008-09 (Q UARTERLY) ANNUAL
CO MMO DITY Jul-Sep O ct-Dec Jan-Mar Apr-Jun 2008-09 2007-08
The general merchandise
Mineral Fuels, Oils and Their Distillation Product 4,542 2,702 1,491 2,029 10,763 11,155
(imports) recorded a fall of Nuclear Reactors, Boilers, Machinery and Appliance 749 717 613 540 2,620 2,822
$3,650 million or 10.3 per cent Electrical Machinery & Equipment and Parts thereof 500 615 428 500 2,044 2,655
over the previous year. Of the Organic Chemicals 513 382 296 366 1,557 1,687
total imports payments against Animal or Vegetable Fats, Oils & Cleavage Products 554 309 332 282 1,477 1,686
general merchandise (f.o.b), Iron and Steel 344 310 294 479 1,428 1,520
Plastics and Articles thereof 358 253 242 238 1,091 1,238
$29,444 million or 93.7 per
Cereals 243 458 159 89 949 636
cent were reported by banks Special Classification Provisions 218 136 219 351 924 1,202
while those under foreign Vehicles other than Railway /T ramway Rolling Stock 278 200 139 134 751 1,134
economic assistance, personal Cotton 171 182 84 209 646 1,139
baggage & NRI, sale of duty Organic or Inorganic Compounds of Precious Metals 190 201 103 76 569 326
free shops and others taken Fertilizers 152 56 141 102 451 720
Optical, Photographic, Measuring and Medical Inst. 106 108 97 95 407 451
together amounted to $1,966
Miscellaneous Chemical Products 98 103 95 109 404 396
million or 6.3 per cent. Oil Seeds and Oleaginous Fruit 99 33 75 161 368 489
Paper and Paperboard, Articles of Paper Pulp 95 67 66 96 323 410
Major commodities groups Man-Made Staple Fibers 97 67 59 93 316 286
constituting 89 per cent of total Edible Vegetables 54 43 98 92 286 231
import payments reported by Pharmaceutical Products 83 78 58 56 275 240

banks during 2008-09 in All Others 1,015 809 874 866 3,564 3,670
Grand Total 10,458 7,830 5,963 6,963 31,213 34,090
descending order except other
groups are shown in table together with
import payments during 2007-08.

Country-wise analysis showed that 41

per cent of total imports payments were
made to a group of countries including
Saudi Arabia, UAE, China and Kuwait in
FY 09.The country-wise comparison of
import payments of major countries
including freight during 2008-09 with
2007-08 is exhibited in the Figure 2.

(Million US $)
Services 2008-09 2007-08
ITEM Credit De bit Net Credit Debit Ne t
The deficit in services account Service s 4,106 7,487 -3,381 3,589 10,046 -6,457
1. T ransportation
decreased by $3,076 million from 1,231 3,633 -2,402 1,035 3,785 -2,750
1.1 Passenger 653 545 108 631 532 99
$6,457 million in 2007-08 to $ 1.2 Freight 126 2,626 -2,500 131 2,959 -2,828
3,381 million in 2008-09. The 1 .3 Other 452 462 -10 273 294 -21
aggregate receipts of services 2. T ravel 314 1,002 -688 264 1,578 -1,314
transactions during 2008-09 2.1 Business 14 22 -8 20 38 -18
increased by $517 million or 14.4 2.2 Personal 300 980 -680 244 1,540 -1,296
percent to $4,106 million from 3. Communications services 196 144 52 117 107 10
4. Construction services
$3,589 million during 2007-08 31 70 -39 37 56 -19
5. Insurance services 59 133 -74 54 152 -98
and aggregate payments went 6. Financial services 63 166 -103 43 184 -141
down by $2,559 million or 25.5 7. Computer and information services 184 122 62 154 129 25
per cent to $7,487 million from 8. Royalties and license fees 11 93 -82 51 130 -79
$10,046 million during 2007-08. 9. Other business services 493 1,648 -1,155 450 3,432 -2,982
The higher receipts were recorded 10. Personal, cultural, and recreational services 1 3 -2 4 2 2
11. Government services. 1,523 473 1,050 1,380 491 889

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under government services, transportation services and other business services. The higher payments
were, however, made against transportation, other business and travel services.
(Million US $)
Income
2008-09 2007-08
ITEM Credit Debit Net Credit Debit Net
The income deficit of $4,407
Income 874 5,281 -4,407 1,613 5,536 -3,923
million in 2008-09 increased by
1.  Compensation of employees 16 2 14 10 0 10
$484 million as compared to $
2.  Investment income 858 5,279 -4421 1,603 5,536 -3,933
3,923 million during 2007-08. The
2.1 Direct investment 39 3,192 -3153 47 3,112 -3,065
net outflow of direct investment
2.1.1 Income on equity 39 3,192 -3153 47 3,112 -3,065
income rose to $3,153 million
2.1.2 Income on debt (interest) 0 0 0 0 0 0
during 2008-09 as compared with
2.2 Portfolio investment 597 998 -401 889 1,213 -324
$3,065 million during 2007-
2.2.1 Income on equity (dividends) 3 174 -171 19 249 -230
08.Also net outflow of portfolio
2.2.2 Income on debt (interest) 594 824 -230 870 964 -94
investment income and other
2.3 Other investment 222 1,089 -867 667 1,211 -544
investment income increased by
2.3.1. IMF charges 0 52 -52 0 18 -18
$77 million & $323 million
2.3.2. Interest on External debt 0 663 -663 0 741 -741
respectively during 2008-09 over
2.3.2.1 Civil 0 653 -653 0 737 -737
2007-08.
2.3.2.2. Military 0 10 -10 0 4 -4
2.3.3. Commercial ( Medium & short) 0 7 -7 0 10 -10
2.3.4. IDB (Medium & short-term) 0 41 -41 0 11 -11
2.3.5. Interest on private sector debt 0 109 -109 0 184 -184
Current Transfers 2.3.6.Other investment income 222 217 5 667 247 420

The net inflow of current (Million US$)

transfers amounted to $11,154 2008-09 (Q uarterly) Annual

ITEM Jul - Sep O ct - Dec Jan- Mar Apr - Jun 2008-09 2007-08
million during 2008-09 as Current transfers ( net ) 2,690 2,413 3,079 2,972 11,154 11,476
compared with $11,476 million in Current transfers receipts 2,708 2,457 3,110 2,981 11,256 11,618
the previous year showing a General government 76 36 64 34 210 484
decrease of $322 million. The net Saudi oil facility 0 0 0 0 0 0
decrease in general government Cash grants for budgetary support 40 30 57 15 142 409
Others 36 6 7 19 68 75
transfers was $274 million during Other sectors 2,632 2,421 3,046 2,947 11,046 11,134
2008-09 where the net inflows Workers remittances 1,879 1,761 2,018 2,153 7,811 6,451
were $210 million in current year Residents FCAs -27 -185 -7 -52 -271 444
as compared to $484 million in Others 780 845 1,035 846 3,506 4,239
2007-08. There has been a Current transfers payments 18 44 31 9 102 142
General government 2 24 16 5 47 56
significant decrease of $267
Other sectors 16 20 15 4 55 86
million in cash grants in FY09.
Workers’ remittances, however, remained flamboyant with a 21 per cent growth rate to reach
$7,811 million in FY09 as compared with $6,451 million in last fiscal year.

Capital & Financial Account (Million US$)

2008-09 (Q uarte rly) Annual
ITEM Jul - Se p O ct - De c Jan- Mar Apr - Jun 2008-09 2007-08
The net inflow in capital & C apital and Financial Account (ne t) 1,359 1,736 1,326 1,666 6,087 8,252
financial account during 2008- C apital Account (ne t) 28 44 66 317 455 121
Of which
09 stood at $6,087 million as -Debt Forgiveness 0 0 0 0 0 0
against $8,252 million during -Project Grant 24 23 64 316 427 111
previous year. The net capital Financial Account (net) 1,331 1,692 1,260 1,349 5,632 8,131
1- Direct Investment 1,117 1,234 691 678 3,720 5,410
inflow amounted to $455 2-Portfolio Investment -184 -19 -750 -120 -1,073 32
million in current period as 3-Other Invest ment 398 477 1319 791 2,985 2,689

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against $121 million in 2007-08. The project grant increased by $316 million in 2008-09 as
compared to previous year. The net inflow in financial account during 2008-09 stood at $5,632
million as against $8,131 million in the previous (Million US$)
year. I TEM 2008-09 2007-08
1.Utilization of foreign loans / credit s 8,656 4,131
I) Long-t erm 7,922 3,431
Official 2,956 2,354
The inflow of foreign loans/credits including short- a) P roject loans 841 1250
term loans stood at $8,656 million as compared with b) Non-project loans 2,115 1,104
$4,131 million last year. Of the total disbursement i) Food 0 0
ii) Non-food 2,115 1,104
of long-term loans of $7,922 million, $841 million Privat e un-guaranteed 4,966 1,077
were for financing of various projects while $2,115 II) Short-term 734 700
Official 734 700
million were non-projects loans. The repayment of Privat e un-guaranteed 0 0
long-term loans/credits stood at $2,708 million 2. Repayment of foreign loans /credits 2,708 1,606
I) Long-t erm 1,851 1,465
during the current year as against $1,606 million in Official 1,389 1,131
the previous year. The repayment of short-term Civil 1,309 1,090
loans/credits stood at $857 million during current Milit ary 80 41
Privat e un-guaranteed 462 334
year as against $141 million during the previous II) Short-term 857 141
year. Official 857 141
Privat e un-guaranteed 0 0

(Million US$)
ITEM 2008-09 2007-08
1. Medium and long-t erm(civil) 653 737
2. Military 10 4
3. Commercial 7 10
4. IDB 41 11
The interest paid on public and publicly
T ot al public and publicly guaranteed 711 762
guaranteed loans amounted to $711 million 5. Privat e un-guarant eed debt 109 184
whereas interest on un-guaranteed private loans 6. IMF charges 52 18
7. Other Interest 424 455
stood at $109 million. An amount of $52 million
T ot al Interest 1,296 1,419
was paid to International Monetary Fund (IMF) as
charges.

(Million US$)
2008-09 (Q UARTERLY) ANNUAL
Reserves and related items IT EM Jul – Se p O ct – Dec Jan – Mar Apr – Jun 2008-09 2007-08
1. Reserves -SBP (net) 3,191 1,563 -764 -934 3,056 5,365
1.1 Foreign Exchange 3,227 -1,429 -730
5,538 -1,703 -635
Foreign exchange reserves held 1.2 Reserves position in the Fund 0 0 0 0 0 0
by State Bank of Pakistan (SBP) 1.3 Use of Fund credit -36 2,992 -34 769 3,691 -173

including SDR decreased by i) Purchases/drawings 0 3,050 0 852 3,902 0

ii) Repurchases/repayments -36 -58 -34 -83 -211 -173
$2,309 million during the year. a) Extended fund facility -3 -5 -2 -5 -15 -25
The purchases/drawings of b) PRGF -33 -53 -32 -78 -196 -148

$3,050 million (SDR 2,068 million) and $852 million (SDR 264 million) were taken place in
second and fourth quarter of fiscal year 09. On the other hand, the repurchases/repayments of $211
million (SDR138 million) were made to IMF during the year as against $173 million (SDR109
million) in last year.

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 Summary Balance of

ITEM

Current Account Balance -4,213 -3,625 -545 -878 -9,261 -13,874

Current Account Balance without off.
-4,287 -3,637 -593 -907 -9,424 -14,302
transfers
Goods: Exports f.o.b 5,711 4,379 4,231 4,800 19,121 20,427
Goods: Imports f.o.b 10,229 8,077 6,276 7,165 31,747 35,397
Trade Balance -4,519 -3,698 -2,045 -2,365 -12,627 -14,970
Services: Credit 1,133 941 777 1,255 4,106 3,589
Services: Debit 2,392 2,021 1,389 1,685 7,487 10,046
Balance on Goods & Services -5,778 -4,778 -2,657 -2,795 -16,008 -21,427
Income: Credit 210 298 185 181 874 1,613
Income: Debit 1,335 1,558 1,152 1,236 5,281 5,536
Of which : Interest payments 440 656 384 435 1,915 2,175
Profit & Dividend 221 221 121 194 757 921
Balance on Gds & Serv. & Inc -6,903 -6,038 -3,624 -3,850 -20,415 -25,350
Current Transfers.: Credit 2,708 2,457 3,110 2,981 11,256 11,618
Of which:          
Workers' Remittances 1,879 1,761 2,018 2,153 7,811 6,451
FCAs Residents -27 -185 -7 -52 -271 444
Saudi Oil Facility 0 0 0 0 0 0
Current Transfers :Debit 18 44 31 9 102 142
Capital Account, 28 44 66 317 455 121
Capital Account, : Credit 28 48 66 318 460 128
Project Grants 24 23 64 316 427 111
Debt Forgiveness 0 0 0 0 0 0
Others 4 25 2 2 33 17
Capital Account... Debit 0 4 0 1 5 7
Financial Account 1,331 1,692 1,260 1,349 5,632 8,131
Direct Investment Abroad -6 -2 -3 -14 -25 -75
Dir. Invest. In Rep. Econ. 1,117 1,234 691 678 3,720 5,410
Portfolio Investment Assets -10 -15 8 -24 -41 -5
Equity Securities -10 -15 8 -24 -41 -5
Debt Securities 0 0 0 0 0 0
Portfolio Investment Liab. -174 -4 -758 -96 -1,032 37
Equity Securities -171 7 -254 -93 -511 20
Debt Securities -3 -11 -504 -3 -521 17
Financial Derivatives Assets 0 0 0 0 0 0

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Payments –Overall

(Million US Dollars)
ITEM

Financial Derivatives Liabilities 0 0 0 0 0 0

Other Investment Assets 448 -30 174 -32 560 32
Monetary Authorities 0 0 0 0 0 0
General Government -1 3 3 3 8 5
Banks 457 -224 93 20 346 525
Other Sector -8 191 78 -55 206 -498
Other Investment Liab. -44 509 1,148 837 2,450 2,732
Monetary Authorities 0 0 -1 0 -1 490
General Government 5 196 1,087 660 1,948 1,761
Disbursements 715 1,011 883 1,081 3,690 3,054
Long-term 715 410 795 1,036 2,956 2,354
Project loans 222 187 162 270 841 1,250
Food loans 0 0 0 0 0 0
Program loans 493 223 633 766 2,115 1,104
Short-term 0 601 88 45 734 700
Commercial loans 0 50 0 0 50 0
IDB loans 0 551 88 45 684 700
Amortization 687 815 322 422 2,246 1,272
Long-term 525 273 269 322 1,389 1,131
Short-term 162 542 53 100 857 141
Other Liabilities -23 0 526 1 504 -21
Banks 244 63 -110 94 291 66
Other Sector -293 250 172 83 212 415
Disbursements 145 409 313 197 1,064 1,027
Amortization 112 103 131 116 462 334
Other Liabilities -326 -56 -10 2 -390 -278
Net Errors and Omissions -238 226 -17 146 118 257
Overall Balance -3,091 -1,663 764 934 -3,056 -5,365
Reserves and Related Items 3,091 1,663 -764 -934 3,056 5,365
Reserve Assets 3,227 -1,429 -730 -1,703 -635 5,538
Use of Fund Credit and Loans -36 2,992 -34 769 3,691 -173
Purchases / 0 3,050 0 852 3,902 0
Repurchases 36 58 34 83 211 173
Exceptional Financing -100 100 0 0 0 0

SBP Reserves 6,286 7,833 8,453 10,257 10,257 9,539

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