KARACHI - Pakistans current account deficit narrowed by 5 billion dollars to $8.86 billion during fiscal year 2008-09. In percentage, the YoY growth in current account deficit substantially decreased by 36 per cent in FY09 amid a significant decline in trade deficit, oil import bill and slight recovery in capital account. In financial year 2007-08, the current account deficit touched $13.86b. In 2008-09, current account balance without off transfers stood at $9.02b as against $14.29 during last financial year. The significant level of improvement witnessed in overall Pakistans current account balance during the period under review is aided by a sharp contraction in trade and current account, robust growth in remittances and modest recovery in capital account. Consequently, foreign exchange reserve surpassed to $12.2b while SBP gross reserves amounted to $9.846b during FY09 (excluding reserves of commercial banks). The statistics on balance of payments position compiled by SBP for the fiscal year 2008-09 revealed that total goods exports slashed to $17.22b $20.42b of previous year while imports declined to $31.71b in FY09 from $35.39b registered in the FY08. The relief in imports growth owed to lower quantum of imports as well as large fall in commodities prices contained the size of import bill, which squeezed the current account deficit to $8.861b in FY009. Trade balance decreased to $12.494b in July-June 2008-09 as against $14.970 bilion of last fiscal. Balance of goods and services reached the level of $15.725b during the reviewed period as compared to $21.427b of FY08. Income account deficit decelerated to $902b in July-June FY09 from $16.13b of previous year. A large part of decrease was driven by a fall in interest payments, which amounted at $18.74b as against 21.67b of FY08. Profit and dividend reduced to $740b from 921b of last financial year. Unlike the previous year, current transfers went down to $11.30b during FY2008-09 despite receiving $7.81b in the year under review. Resident foreign currency accounts registered a net outflow of $2.48b in July-June FY09. Capital account increased to $160b during FY09 as against $121b witnessed in FY08. Financial account slashed to $50.10b as against $81.35b of preceding year. This decline was a result of confluence of factors such as weakening economic fundamentals, deteriorating law and order situation, slack functioning of stock market, lack of privatisation proceeds and in the presence of global financial crises the foreign investors shied away from investing as expectations of the lower degree of profitability, and host of risks and uncertainties. Worsening law and order situation, below-than-anticipated performance of stock market and risk behaviour of foreign investors hampered capital and financial flows to Pakistan whereby the net inflow of foreign investment declined to $25b. Foreign direct investment reached $ 3.722b. ERUM ZAIDI