KARACHI: Pakistan’s current account deficit plunged by 27 percent in July 2025, the State Bank of Pakistan (SBP) reported on Tuesday.
According to the State Bank of Pakistan (SBP), the country’s current account recorded a deficit of $254 million in the first month of the current fiscal year (FY26), compared to a deficit of $348 million in the same period last year (FY25), reflecting an improvement of $94 million.
In contrast, the current account had posted a surplus of $328 million in June, taking the cumulative surplus for FY25 to $2.1 billion (0.5 percent of GDP), the first annual surplus in 14 years, largely driven by a sharp rise in workers’ remittances.
Policymakers anticipate that the current account will slip back into deficit this fiscal year, primarily due to a surge in import bills driven by rising domestic demand. In the previous fiscal year, however, workers’ remittances played a pivotal role, more than offsetting the widening trade deficit.
Going forward, the SBP is expecting workers’ remittances to grow at a slower pace amidst high base effect and recent rationalization of home remittances incentive schemes. The trade deficit is expected to widen due to increased import demand, in line with the improving domestic economic activity.
With expected slow growth in home remittances and higher import bill, SBP has projected that the current account deficit is expected to be in the range of 0 to 1 percent of GDP in FY26. The SBP’s foreign exchange reserves have already reached the $14 billion mark at the end of the last fiscal year due to arrival of planned inflows in June.
On the financing side, inflows are likely to improve during this fiscal year, partly due to higher expected private flows following the recent upgrade in the country’s credit rating. Based on this assessment, the SBP’s foreign exchange reserves are projected to increase by $3.5 billion to reach $17.5 billion by the end of June 2026.
According to the SBP, Pakistan’s goods import bill rose by 12 percent to $5.422 billion in June 2025 up from $4.849 billion in June 2024. On the other side, exports posted a growth of 16 percent to $2.743 billion in June 2025 compared to $2.361 billion in June 2024. Overall, the goods trade deficit rose by 7 percent to settle at $2.679 billion in the first month of this fiscal year.
Copyright Business Recorder, 2025
