EDITORIAL: Pakistan registered a current account surplus in September 2025 on the back of higher remittance inflows as per statistics uploaded by the State Bank of Pakistan (SBP), which rose to USD 3183.75 million (against USD 3138.17 million in August).
Remittances were seasonally adjusted using as per the SBP X12 ARIMA (a statistical method for time series forecasting) and MINITAB (software used to perform ARIMA analysis through collection of a sequence of data points, equally spaced points in time, and ordered chronologically), which led the Bank to estimate total remittance inflows for September 2025 at USD 3206.51 million.
It is, however, relevant to note that: (i) the September 2025 total remittance inflows (minus the seasonal adjustment) were higher than the September 2024 total of USD 2.8 billion — higher by an impressive 14 percent; (ii) the September 2025 total was not the highest in the current calendar year with total inflows in May 2025 estimated at USD 3685.59 million (perhaps attributable to Eid in June 2025) as well as the seasonally adjusted remittance inflows for May 2025 estimated at USD 3494 million though it is not known if the forthcoming Eid was taken into consideration; and (iii) in July 2025 remittances were USD 3214.651 million, with the September total lower by negative one percent while the seasonally adjusted figure was around 8 percent lower. Be that as it may, higher remittance inflows must be appreciated as they are the outcome of the sustained efforts through appropriate policy measures to ensure that Pakistanis remitting money back home do not use the illegal hundi/hawala system.
For Pakistan to experience a current account surplus (inclusive of trade balance, remittance inflows and net income/transfers) must be appreciated, given that the country is subjected to periodic negative trade balance (attributed to the boom/bust cycle — boom associated with higher raw material/semi-finished product imports to fuel industry leading to a trade deficit that requires external borrowing) with imports traditionally controlled by administrative measures.
In this context, it is apparent that the government did engage in such measures in the recent past, which led to a throttling of the growth rate with its associated lower national output, high unemployment levels (22 percent) and rising poverty levels (44.7 percent). Unlocking these measures led to higher imports, which led to negative USD 7352 million in September, higher than the August deficit of USD 5139 million, which was higher than the July figure of negative USD 2637 million. This indicates that the government needs to also focus attention on raising exports that are not entirely dependent on a good monsoon year and higher international prices of our major exports.
The government authorities also need to focus on the balance of payments position that takes account of not only the current account but also massive borrowing to largely fund outflows as well as budget requirements.
Debt Management Office has compiled the following rather disturbing data for the current year: gross external debt inflow for the current year is budgeted at USD 19,923 million (multilaterals USD 5 billion with an additional USD 410 million under the IMF’s RSF), bilateral deposits USD 10.3 billion, commercial banks USD 3 billion.
Outflows are budgeted at USD 19,559 million (including USD 5056 million to multilaterals, USD 10,343 million to bilaterals, USD 3100 million to commercial banks).
Domestic gross inflows are projected at 22 trillion rupees borrowed mainly from the treasury bills (8.7 trillion rupees), Pakistan Investment Bonds generating another 8.5 trillion rupees and 3.3 trillion rupees from issuing Ijara sukuk.
With 15.5 trillion rupees budgeted as domestic outflows (to meet interest as well as principal as and when due), the government expects to borrow 6.395 trillion rupees for budgetary needs.
There is a need to focus on raising all components of the current account balance as well as arrest in the short term and reduce in the medium term the existing heavy reliance on external and domestic borrowing.
Copyright Business Recorder, 2025
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