KARACHI: With a sharp decline in the current account deficit (CAD) to $12 million in February from $420m in the preceding month, Pakistan recorded a surplus of $691m in the first eight months of FY25 against a CAD of $1.7bn a year ago, showed data released by the State Bank of Pakistan (SBP) on Monday.
The central bank recently said that the current account would be in deficit or surplus by 0.5 per cent of GDP in FY25 compared to a $1.7bn CAD in FY24.
The data showed that the increasing imports had widened the trade deficit, which impacted the current account. The imports increased by almost $4bn to $38.32bn in 8MFY25 compared to $34.4bn a year ago.
The balance on trade in goods during this period was a deficit of $16.5bn compared to $14bn in the same period of last fiscal year.
Pakistan records $691m current account surplus in 8MFY25
The trade gap in services widened to $2.25bn from $1.7bn in the sampe period last year.
According to SBP, the combined balance in goods and services during July-Feb FY25 posted a deficit of $18.755bn against $15.787bn in the same period last year. The large trade deficit was the real cause of the CAD in February.
Experts said the current account surplus during the 8 months was due to a surge of 32pc in the remittances. It was also observed that due to Ramazan, higher inflows supported the country in keeping the exchange rate stable with relatively better foreign exchange reserves.
The SBP’s foreign exchange reserves, which have the target to reach $13bn by the end of FY25, are still at around $11bn.
The current financial year could not see any significant improvement in exports as it slightly increased to $21.8bn during the first 8 months compared to $20.35bn a year ago.
In January, the CAD stood at $420m against $404m in the same month last year. However, December 2024 posted a surplus of $474m, which increased the total surplus in the first 6 months of FY25 to $1.2bn; since then, the surplus has been declining.
Bankers said the negotiations with the IMF sound successful, which may open up inflows from other channels. Pakistan still needs up to $5bn for debt repayments, while a large amount of around $14bn is believed to have been rolled over by the friendly countries. Official data regarding the total rollover amount was not released.
Published in Dawn, March 18th, 2025
