ISLAMABAD -  The Economic Coordination Committee (ECC) of the Cabinet on Thursday showed concern over the widening of current account deficit, which sharply widened to $4.72 billion in the first seven months of the current fiscal year.

The current account deficit had widened by 90.23 percent to $4.72 billion during July-January of the ongoing financial year 2016-17 as against $2.48 billion of a year ago. The deficit had increased due to higher trade gap and slowdown in workers’ remittance inflows and foreign investment. Rising global oil prices, dried foreign inflows and lower exports are building pressure on the current account position.

The ECC meeting, chaired by Finance Minister Ishaq Dar, has urged to increase exports of goods and services to bridge the gap. In consideration of the proposal submitted by the Privatisation Division, the ECC also approved one month’s (November 2016) salary to the tune of Rs380 million for the employees of Pakistan Steel Mills, Karachi.

The meeting also reviewed the key economic indicators. Finance Secretary Tariq Bajwa gave a detailed presentation to the meeting. It was informed that headline inflation measured by Consumer Price Index (CPI), Wholesale Price Index (WPI) and Sensitive Price Index (SPI) for the month of February 2017 increased to 4.2 percent, 5.3 percent and 1.1 percent, respectively on account of increase in food inflation by 3.7 percent, non-food 4.6 percent and core 5.3 percent.

The committee reviewed the stock position and found that stock of wheat as on February 28, 2017 is 5.52 million tons showing sufficient quantity of local wheat for releases to mills by provincial food departments and PASSCO. The total reported stock of sugar in the country as on February 22, 2017 stood at 3.20 million tons. The stock of various POL products averaged 30 days on March 1, 2017.

The committee was informed that Large Scale Manufacturing is continuously moving upward as in November and December the growth remained 7 percent over last year. The sectors showing positive growth are iron and steel products, which increased by 15.63 percent, electronics 14.35 percent, non-metallic mineral products 9.31 percent, pharmaceuticals 7.90 percent, food beverages & tobacco 6.95 percent, automobiles 6.67 percent, paper & board 5.69 percent, fertilisers 3.47 percent, rubber products 0.45 percent and textile 0.14 percent.

The committee was informed that outlook of industrial sector is positive and encouraging as the credit to private sector seen expansion of more than 22 percent. The industrial sector is improving due to persistent growth in electricity generation and gas production as electricity generation in January 2014-15 was 8,292 MW which increased to 9,210 MW in January 2015-16 and 9,352 MW in January 2016-17. Likewise the gas production also increased above 4000 MMCFD in December 2016 compared to 2015 and 2014 which was 3,627 and 3,780, respectively.

The committee observed decline in wood products, leather products, engineering products, chemicals and coke & petroleum products. The committee noted that negative growth in exports sector is bottom out in January 2017 as it registered a growth of 4.6 percent over last year. However, on average it declined by 1.13 percent, whereas imports on average increased by 9.2 percent and on year-on-year basis increased by 28 percent in January 2017. On the positive note most of the imports is coming in machinery group showing productivity. The import of the machinery registered at 42 percent.

The remittances received during July-January 2016-17 amounted to $10.946 billion against $11.155 billion in 2015-16, registered decline of 1.9 percent. However, on year-on-year in January it was improved by 1.5 percent.

The Federal Board of Revenue (FBR) tax collections (YoY) improved by 9 percent in January and on average, during July-January 2016-17, the tax collection improved by 7.6 percent. The committee also noted that increasing trend in foreign direct investment (FDI) that it improved by almost 10 percent during July-January of the current year over last year. The major recipient sectors were food, power, electricity, and construction.