Pakistan's current account deficit dropped to $12 million

Pakistan's current account deficit (CAD) dropped sharply to $12 million in February, down from $420 million in January. This change has led to a surplus of $691 million for the first eight months of the fiscal year 2025. This time last year, Pakistan had a CAD of $1.7 billion. The State Bank of Pakistan (SBP) noted that imports have increased significantly, widening the trade deficit. Imports rose nearly $4 billion to $38.32 billion in the first eight months of FY25. The trade deficit in goods reached $16.5 billion, up from $14 billion over the same period last year. The services trade gap also widened, increasing to $2.25 billion from $1.7 billion. Overall, the combined deficit in goods and services for the July-February period stood at $18.755 billion, compared to $15.787 billion last year. Experts attribute the recent current account surplus to a 32% rise in remittances. Additionally, increased inflows during Ramadan contributed to stabilizing the exchange rate and improving foreign exchange reserves. The SBP aims to raise reserves to $13 billion by the end of FY25, but they are currently around $11 billion. Exports saw only a slight increase to $21.8 billion compared to $20.35 billion last year. In January, the CAD was $420 million, compared to $404 million in January 2024. December 2024 had reported a surplus of $474 million. Bankers suggest that successful negotiations with the IMF could lead to further financial assistance. Pakistan needs approximately $5 billion for debt repayments. Reports indicate that around $14 billion may have been rolled over by friendly nations, although official figures have not been disclosed.