Article Type

Article

Description

Very few people outside the economics profession realize that fiscal (government revenue and expenditure) and current accounts (inflows and outflows of foreign exchange) are closely interlinked. A current account is an accounting identity which shows the difference between a country’s national savings and domestic investments. China is a current account surplus country because its national savings are higher than its investment needs and is therefore a capital exporting nation that is financing the current account deficit of the US. Pakistan, except for three years – 2003, 2004 and 2005 – has been a current account deficit country. Since significant foreign direct investment is not flowing in (except in the years 2007 and 2008), it has been relying mainly on foreign savings in the form of external borrowings to fill in this gap between national savings and investment –that is: a current account deficit.

Publication Source

The News

Publication Date

12-23-2022

Pages

1-4

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