By Staff Reporter
KARACHI: Pakistan’s current account swung to a surplus of $2.1 billion in the fiscal year 2024-25, marking the first annual surplus in 14 years and the largest in 22 years, driven by a surge in remittances and structural reforms, the State Bank of Pakistan (SBP) data showed on Friday.
The surplus, equal to 0.5 percent of GDP, reverses a $2.07 billion deficit from the prior year. June alone recorded a $328 million surplus, the central bank said.
“Country’s Current Account (CA) for June 2025 closes in $328 million surplus, taking full-year surplus to over $2.1 billion — annual surplus recorded after 14 years, and the largest surplus in 22 years,” Khurram Schehzad, an adviser to the finance ministry, posted on social media X.
Analysts say the current account surplus eases pressure on Pakistan’s foreign exchange reserves and strengthens its balance of payments, offering a rare bright spot in an economy grappling with structural challenges. Sustaining this progress will hinge on continued reforms and robust remittance flows.
The surplus was fueled by a 27% jump in remittance inflows, which reached $38.3 billion in FY25. “The major factor was a significant increase in workers’ remittances,” said Samiullah Tariq, Head of Research at Pak Kuwait Investment Company. Workers’ remittances in June 2025 alone totaled $3.41 billion, up 8% from the same month last year.
Waqas Ghani, Head of Research at JS Global, pointed to additional dynamics supporting the surplus. “Remittances outpaced the trade deficit, while the services deficit also stayed contained.”
In June 2025, Pakistan’s exports of goods and services rose 8% year-on-year to $3.33 billion, outpacing a modest 1% increase in imports, which totaled $5.84 billion. For the full fiscal year, however, the goods deficit widened to $27 billion, according to brokerage Topline Securities, though this was offset by a 16% drop in the services deficit and the robust remittance inflows.
The record-high remittances of over $4 billion in March 2025 provided a critical boost, helping to narrow the gap between official and informal exchange rates, a key outcome of structural reforms tied to the International Monetary Fund (IMF) $7 billion program.
The surplus emerges against a backdrop of low economic growth and persistent dollar shortages, factors that have curbed import demand. High interest rates, though recently eased, and targeted import restrictions have also supported policymakers’ efforts to shrink the current account deficit.
Topline Securities noted that the FY25 surplus was bolstered by IMF-backed reforms, including currency market liberalization, energy pricing adjustments, and taxation measures. These steps have enhanced investor confidence and unlocked additional global financing.
Looking ahead, Topline Securities projects a mild current account deficit of $0.5 billion to $1.5 billion (0.1%–0.3% of GDP) in FY26, reflecting a manageable shift from the current surplus. Still, the broader trend signals resilience in Pakistan’s external position.
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