KARACHI: Pakistan recorded a current account deficit (CAD) of $103 million in May, reversing the $47 million surplus posted in April and sharply down from the $1.2 billion surplus seen in March. The decline is mainly due to a widening trade gap and increased external debt servicing.
Despite the setback in May, the current account remained in surplus for the first 11 months (July–May) of FY25, posting a positive balance of $1.812 billion. This compares with a deficit of $1.572 billion during the same period last year.
As the fiscal year approaches its end on June 30, the government has stepped up external payments to meet annual targets. A notable increase in payments for profits and dividends on foreign investments was also recorded, rising to $2.1 billion in 11MFY25.
Still, economists say Pakistan is on track to end FY25 with a current account surplus — a key milestone for the government amid its reliance on multilateral lenders and loan rollovers from allied countries.
Analysts point to record-high remittances, expected to exceed $38 billion this fiscal year, as a major support for the balance of payments. These inflows have allowed the State Bank of Pakistan (SBP) to purchase dollars from the interbank market, meet debt obligations, and shore up foreign exchange reserves. Unofficial estimates suggest the SBP has bought over $4 billion from the banking system so far this year.
“The main benefit of a current account surplus is exchange rate stability, which supports the overall economy — especially importers and exporters,” said Aamir Aziz, an exporter of textile made-ups.
He noted that exporters are selling their proceeds confidently, expecting the rupee to remain stable. Importers, too, are reassured, with no fear of sudden exchange rate shocks.
However, importers have recently reported discrepancies in dollar pricing. They claim banks are charging Rs2-3 more per dollar than the SBP’s quoted rate.
Currency experts warn that geopolitical tensions — particularly Israeli aggression toward Iran — are creating uncertainty in currency markets. Rising oil prices and increased dollar demand could soon put pressure on the rupee.
According to SBP data, the trade deficit in goods and services widened significantly. During the first 11 months of FY25, the deficit reached $27.062 billion, up from $22.615 billion in the same period last year.
