Karachi:
The surplus of current accounts in Pakistan, driven by funding, was on a downward trajectory, because in April 2025, it fell sharply to $ 12 million, a significant drop of $ 315 million in April 2024 and $ 1.2 billion in March 2025.
In April 2025, the surplus of the Pakistan current account fell sharply, mainly due to the increase in imports and a 22% drop in funding, said Ali Najib, sales manager at Insight Securities.
However, despite the monthly slowdown, the cumulative surplus for the first 10 months of the year 2025 (July-April) reached $ 1.9 billion, a major turnaround compared to the deficit of $ 1.34 billion recorded during the same period of 24 years, reflecting the improvement of external entries and the transfer force (SBP).
“The last time Pakistan has seen a full account surplus in full year was over 14 years ago, making it a significant development for a country beset with external imbalances,” wrote Sana Tawfik and Rao Aamir Ali of Arif Habib Limited (AHL) in a report.
Shipments of funds open the way
The main engine behind the turnaround is a sharp increase in workers’ funds, which increased from 31% in annual sliding (yoy) to 31.2 billion dollars in 10 MFY25. In April alone, funding of funds reached $ 3.2 billion, up 13% in annual shift. The largest entries came from Saudi Arabia ($ 728 million, up for 2%), water ($ 658 million, up 21%) and the United Kingdom ($ 535 million, up 33%).
Analysts consider this to be a crucial cushion against the increase in imports and outputs related to investments. “The sharp increase in funding has been decisive not only to compensate for the trade deficit, but to obtain a global surplus of the current account,” noted AHL in its report.
For the future, the brokerage house expects 255 FY5 to end with an surplus of $ 1.6 billion, mainly due to funding in the full year of 37.4 billion dollars, which represents an annual sliding growth of 24%.
The trade deficit extends
Although the overall external position has improved, the trade balance remains a structural concern. Imports of goods from Pakistan increased 12% in annual shift to $ 48.6 billion over 10mfy25. In April alone, imports increased by 18% in annual slipping and 6% per month (MOM) to $ 5.2 billion, led by oil ($ 1.2 billion), machines ($ 792 million) and chemicals ($ 790 million).
The strong volatility highlights the use of funding and external entries, posing risks to sustained stability in the balance of payments, said Najib.
Exports of goods, although higher in annual slip at 27.3 billion dollars, dropped by 1% in April 2025 compared to the same month of last year and decreased by 6% compared to March 2025. Consequently, the trade deficit of goods has extended 19% in annual shift to 21.3 billion dollars during the period of 10 months.
The service sector has shown a modest improvement. Service exports increased 9% in annual slipping to $ 6.9 billion in 10 MFY25, supported by technological exports, which increased 21% in annual sliding to 3.14 billion dollars, representing 44% of total service exports. However, the overall trade balance of goods and services posted a combined deficit of $ 23.8 billion, against $ 20.4 billion in the same period from last year.
The main income account, largely reflecting the interests and dividend payments on debt and external investment, posted a deficit of $ 7.13 billion in 10 MFY25, up 13% in annual shift. In April, the deficit amounted to $ 603 million, slightly higher than April 2024, but down 8% compared to March.
On the other hand, the balance of secondary income, which includes funding, has shown a robust increase of 30% in annual sliding to 32.8 billion dollars, playing a central role in the conduct of the current account surplus.
Direct foreign investment (IDE), however, remained in misery and volatile. The Net IDE for April was $ 141 million, compared to $ 26 million in March. Cumulatively, the net IDE decreased by 3% in annual sliding to $ 1.79 billion in 10 MFY25. Ahl noted that although there has been a collection in recent months, IED entries remain concentrated and lack diversification between the sectors.
The financial account, which includes foreign investments and external loans, recorded a surplus of $ 1.6 billion in 10 MFY25 compared to a deficit of $ 4.2 billion last year, reporting an improved capital flow environment.
Optimus Capital Research, Maaz Azam, noted that in April 2025, the trade deficit reported by the SBP was $ 762 million at $ 2,626 million, compared to the figures published by Pakistan Bureau of Statistics (PBS).
According to Azam, this divergence stems from differences in export and import reports, the SBP displaying higher exports of $ 470 million to $ 2,611 million and imports down $ 292 million to $ 5,237 million, compared to PBS data. This variance considerably influenced the results of the external account, which led to a balance of the almost flat current account, “contrary to the market expectations of a slight deficit”.
