PAKISTAN’S current account posted a surplus for the first time in 14 years in the fiscal year that ended in June 2025, helped by record-high remittances and a decline in the services deficit.
According to the data released by the State Bank of Pakistan (SBP), current account surplus stood at $2.1 billion, or 0.5 percent of GDP, in fiscal year 2024-25 versus the deficit of $2.1 billion, or 0.6 percent of GDP, in the previous year. In June alone, the country recorded a surplus of $328 million, in contrast to a deficit of $84 million in the previous month and a deficit of $500 million in June 2024.
The development is surely a sign of economic stabilization, a goal pursued vigorously by the incumbent government, prompting Prime Minister Shehbaz Sharif to express gratitude over the achievement, who described it as highly encouraging. The improving financial and economic indicators demonstrated that Pakistan’s economy was steadily on the path to stability and the PM has vowed to continue prioritizing measures to enhance the business and investor-friendly environment in the country. The primary reasons for this surplus included a 27 percent increase in remittances and a 16 percent decline in the services deficit. However, the goods deficit rose by 21 percent year-on-year to $27 billion, while the services deficit fell by 16 percent to $2.6 billion. Economists and financial experts also point out that remittances reached an all-time high of $38.3 billion in FY25, driven by higher incentives offered to financial institutions to facilitate remittances through formal channels, an increase in manpower exports and a reduction in the exchange rate differential between official and unofficial markets, which encouraged remittance flows through formal channels. The realization of planned inflows from multilateral and commercial sources, combined with the surge in remittances, helped Pakistan’s central bank increase its foreign exchange reserves over $14 billion in FY25. The Prime Minister has attributed the current account surplus to a ‘significant’ increase in remittances and exports. There is no doubt that remittances by Overseas Pakistanis reached a record level during the outgoing year but there is hardly anything to celebrate on the export front, which remains shaky despite announcements of relief and incentives by the government. This is confirmed by the fact that textile exports grew barely by 7.39 percent to $17.88 billion in FY2025, up from $16.65 billion the previous year, which should be a cause for concern – the sector remains over-reliant on government subsidies and lacks market diversification, even as it remains the country’s export backbone. Exporters and analysts warn that the industry’s structural weaknesses — including limited product innovation investment, insufficient value-added goods and heavy dependence on Western markets — continue to stifle sustainable growth. There were prospects of a meaningful increase in IT exports but the retrogressive measures introduced in the current year’s budget might hamper its growth as well. The same is the case with the remittances, which might not keep the pace due to the policy shift. There are concerns remittances might not maintain their record-high levels, particularly due to the government’s decision to cut subsidies for banks handling remittances, which could reduce the flow through banking channels. Similarly, imports are also increasing at an alarming rate and this process could offset gains on other fronts, especially when the government is embarking upon a phased-wise programme for reduction of import duties, which could make Pakistan a dumping ground for foreign goods imperiling local production. The current account surplus is definitely a positive development but no breakthrough is expected on the economic front until and unless the government undertakes a comprehensive exercise to identify contradictions in its own policies and comes out with genuine programmes for a substantial growth in industrial/agricultural production as well as exports.
