By Staff Reporter
KARACHI: Pakistan’s current-account deficit widened to $874 million in the three months through September, central bank data showed, with imports growing almost twice as fast as exports.
The September shortfall was $356 million, compared with a surplus of $133 million a year earlier, according to provisional State Bank of Pakistan figures. That followed a revised $73 million deficit in August. The quarterly gap was about 16% wider than the $755 million recorded in the same period of the previous fiscal year.
Reserves moved the other way. On the central bank’s balance-of-payments measure, which includes cash foreign-currency holdings, gross reserves rose to $22.9 billion at the end of September from $18.5 billion a month earlier. They were $15.5 billion a year before. The accounts show a net $2.89 billion inflow into debt securities in September, against a $500 million outflow a year earlier. The government sold $3 billion of Eurobonds in its largest single international issuance, in two tranches: $1.75 billion of 5½-year notes at a 7.50% coupon and $1.25 billion of 10-year notes at 7.90%. The finance ministry said demand reached nearly $6 billion.
Goods exports rose 15.5% from a year earlier to $3.02 billion in September, while imports jumped 22.7% to $6.17 billion. The goods trade deficit widened to $3.16 billion from $2.42 billion. For the quarter, exports increased 7.7% to $8.45 billion and imports rose 14.3% to $17.78 billion, taking the goods deficit to $9.33 billion, about 21% more than a year earlier.
Customs-based figures from the Pakistan Bureau of Statistics paint a larger gap. They show a first-quarter trade deficit of $10.8 billion, with imports at $19.2 billion and exports at $8.4 billion, according to Topline Securities. The central bank compiles its trade numbers from exchange records, which can differ from customs data.
The services deficit was $281 million in September, up from $155 million a year earlier, as imports of $1.21 billion outweighed exports of $931 million. For the quarter, the services gap narrowed marginally to $831 million from $840 million, with exports up almost 23%. The primary-income deficit, which mainly reflects interest and profit payments abroad, was $792 million in September and $2.32 billion for the quarter.
Workers’ remittances again cushioned the account. They reached $3.59 billion in September, up almost 13% from a year earlier but slightly below August’s $3.66 billion. For the quarter, they totaled $10.88 billion, up 14% from $9.54 billion. Secondary income, the category that includes remittances, produced a surplus of $11.61 billion in the period. The central bank expects remittances to exceed its $44 billion target for the fiscal year.
Financing
Direct investment in Pakistan was $219 million in September and $720 million for the quarter, up from $185 million and $600 million a year earlier. Government loan repayments more than doubled to $2.08 billion in the quarter from $946 million, while disbursements were little changed at $1.23 billion. Repayments to the International Monetary Fund were $206 million, compared with $122 million. In September alone, repayments of $617 million outstripped disbursements of $314 million.
The central bank attributed a record rise in its reserves in the week ended Sept. 11 to receipt of the Eurobond proceeds. Central bank-held reserves stood at $21.45 billion in the week ended Oct. 2, with total liquid reserves, including commercial banks’ holdings, at $26.8 billion. That is above the bank’s targets of $20.2 billion for December and $21 billion for June 2027. The reserves figure in the balance-of-payments table differs from the weekly series because of definitions.
The revised data show a weaker external position last fiscal year than first reported. The deficit for the year ended June was revised to $391 million, or 0.09% of gross domestic product, from the $139 million initially reported. The previous year’s surplus was $1.84 billion. The goods deficit for the year was $33.7 billion, compared with $26.8 billion in fiscal 2025.
The central bank expects the current-account deficit to stay between zero and 1% of GDP in the current fiscal year. The first quarter’s deficit is well inside that range, though it is running ahead of last year’s pace. Analysts have flagged higher oil prices linked to Middle East tensions as a risk to the external account and inflation. Pakistan imports about 70% of its oil and gas requirements.
Debt service is the other pressure. Pakistan faces $21.5 billion in external debt repayments this fiscal year, principal and interest included, and Governor Jameel Ahmad has said about $7.5 billion in net repayments remains.
Domestic conditions remain tight. Consumer-price inflation slowed to 10.26% in September from 11.15% in August. The central bank held its policy rate at 11.5% on Sept. 14.
Official support is also coming. The IMF reached a staff-level agreement with Pakistan on Oct. 7 that would release about $1 billion under its Extended Fund Facility and $210 million under its Resilience and Sustainability Facility, once the executive board approves. The mission said the authorities had navigated the impact of the Middle East conflict and kept macroeconomic stability, and urged the central bank to keep policy tight.
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