Jul-Feb FY25: C/A posts $691m surplus on healthy remittance inflows

KARACHI: Pakistan’s current account showed significant improvement, recording a $0.7 billion surplus in the first eight months of FY25, driven by a rise in home remittance inflows.

According to the State Bank of Pakistan (SBP), despite a monthly deficit in February 2025, the cumulative current account balance for July to February remains in surplus.

Pakistan recorded a current account surplus of $691 million in July-Feb of FY25 as against $1.73 billion deficit in same period of last fiscal year (FY24). Pressures on the external account have emerged due to rising imports amid weak financial inflows, resulting in a monthly current account deficit for the past two months.

After maintaining a surplus for three consecutive months, Pakistan’s current account slipped into deficit in January 2025, primarily due to a sharp rise in the import bill. This trend persisted in February 2025, with broad-based growth in imports pushing the current account into a $12 million deficit, compared to a $71 million surplus in February 2024.

On a positive note, the February 2025 deficit was significantly lower than January 2025, which had recorded a much larger deficit of $399 million.

The consecutive deficits in January and February, mainly due to rising imports, reduced the cumulative surplus to $691 million for the July-February period of FY25.

Pakistan’s import bill surged by 11 percent to $38.325 billion in July-February, compared to $34.410 billion during the same period last fiscal year. On the other hand, the country witnessed a strong 32 percent growth in home remittance inflows, which rose to $24 billion in July-January of FY25.

According to the SBP, import volumes have been rising steadily in line with the pickup in economic activity, while an increase in global commodity prices further inflated import payments in January. However, strong workers’ remittances, coupled with moderate export growth, helped finance the elevated imports.

The SBP, recently said that these developments on economic front are broadly in line with its expectation, and reaffirmed the FY25 current account balance projection of a surplus and a deficit of 0.5 percent of GDP.

For the past few months, net financial inflows are remained weak, mainly due to a shortfall in planned official inflows, however, there are expectation of more foreign inflows, including IMF’s Extended Fund Facility (EFF) programme tranche, in the coming months. IMF mission and Pakistani authorities on March 14, have concluded talks on the first review of the $ 7 billion EFF programme.

Copyright Business Recorder, 2025