Pakistan's current account deficit (CAD) has risen to 4.5 per cent mainly due to the smooth implementation of projects under the USD 63 billion China-Pakistan Economic Corridor (CPEC), according to a report by Asian Development Bank (ADB).
As per the report of ADB titled - 'Asian Development Outlook 2018', the CAD expanded on larger imports that widened the trade deficit despite a strong revival in exports.
The deficits are being addressed, especially by investment in energy, including under the CPEC project. A number of projects, especially in power supply, are already completed or nearly done, with financing from the government development expenditure, multilateral development banks and CPEC resources.
The ADB report said at 8.3 per cent, there was a faster growth in fixed investment, which reflected larger public investment, while private investment grew by only 4.1 per cent, restrained by substantial infrastructure deficits, especially for electric power supply. The large increase in the volume of imports in the face of stagnant exports pushed net exports substantially lower during the same fiscal year.
To support growth enabled by improved energy supply, Pakistan's central bank, the State Bank of Pakistan maintained its policy rate at 5.75 per cent in the fiscal year 2017-18, which facilitated a 13.7 per cent increase in money supply.
The building of the CPEC project is a combination of building roads, rails, power plants and economic free zones in Pakistan.
Thousands of Chinese engineers are currently working on the project. When built, it will link Gwadar to Xinjiang region in China, through Khunjerab Pass, giving Beijing a secure and shortest trade access to international markets.
India is against the CPEC project since it passes through the disputed Pakistan-occupied Kashmir (PoK) region.
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