Pakistan posts current account surplus of $12m

KARACHI: Pakistan’s current account surplus dipped in April compared to March and the same period last year, although it beat forecasts that predicted a deficit.The current account surplus dropped to $12 million, a staggering 99 per cent decrease from the previous month. Year-on-year, the surplus fell by 96 per cent, data by the State Bank of Pakistan (SBP) showed on Friday.

Over the 10 months leading up to April of the fiscal year 2025, the surplus reached $1.88 billion, showing a significant improvement from a deficit of $1.33 billion during the same period last year.

Most analysts had expected the current account to be negative, largely due to a monthly slowdown in remittances. The cash sent home by Pakistanis living abroad fell to $3.2 billion in April, a decrease of 22 per cent from the previous month. However, remittances increased by 13 per cent compared to last year. Inflows for the period from July to April in FY25 rose by 31 per cent, totalling $31.2 billion.

The smaller surplus is primarily attributed to an increase in goods imports and a decline in goods exports. Analysts have also noted discrepancies in the trade data reported by the SBP and the Pakistan Bureau of Statistics (PBS). According to the PBS, the total trade gap was $3.43 billion, while the SBP reported a gap of $2.6 billion. In April, goods exports according to the PBS were $2.1 billion, whereas the SBP recorded exports of $2.6 billion for the same month.

In April, imports of goods rose by 18 percent year-on-year to $5.237 billion, compared to $4.44 billion in the same month the previous year. On a month-on-month basis, goods imports also increased by 6.0 per cent.

“The current account posted a surplus, driven by strong remittance inflows, unusually low dividend and interest payments, and a decline in services imports,” said Awais Ashraf, director of research at AKD Securities Limited.

“This improvement came despite imports exceeding this year’s average by 7.0 per cent and exports falling 4.0 per cent below the average,” Ashraf added.Analysts believe that the current account will continue to remain in surplus for FY25.

“We expect the country to register a current account surplus of $1.6 billion in FY25, marking the first surplus after 14 years. This improvement is primarily attributable to a significant 24 per cent YoY increase in workers’ remittances, which are expected to reach $37.4 billion during the year,” said Sana Tawfiq, head of research at Arif Habib Limited, in a note.

Balance of payments data comes after Pakistan received the second tranche of $1.02 billion from the International Monetary Fund (IMF) as part of the $7 billion loan programme. This disbursement has further bolstered the central bank’s foreign exchange reserves and reinforced macroeconomic stability, restoring more confidence in the rupee and the country’s external position.

The foreign exchange reserves held by the SBP stood at $10.4 billion as of May 9. According to the SBP, the disbursement of the IMF loan will be reflected in its reserves for the week ending on May 16.

Last week, the IMF completed the first review of the 37-month Extended Fund Facility (EFF) that the global lender agreed with Islamabad last year. This review resulted in the approval of a $1 billion disbursement for Pakistan. Additionally, the IMF approved a new loan of $1.4 billion under its climate resilience fund.