- Pakistan has a current account surplus of $729 million.
- The surplus reflects the importance of remittances and the reduction in trade deficits.
- November marks the 4th consecutive month of surplus.
KARACHI: Pakistan recorded its highest current account surplus in almost 10 years in November, supported by a reduction in trade and services deficits as well as a drop in interest and dividend repatriations, News reported Wednesday.
The country recorded a current account surplus of $729 million in November, the highest level since February 2015. This compares to a surplus of $346 million the previous month and a deficit of $148 million in November 2023, according to central bank data released Tuesday.
November marked the fourth consecutive month of surplus. In the first five months of fiscal 2025, Pakistan recorded a current account surplus of $944 million, compared to a deficit of $1.67 billion in the same period last year.
The substantial monthly surplus of 111% in November was attributed to a reduction in the trade deficit, which fell 14% month-on-month to $1.361 billion, while the services deficit narrowed by 43% to $152 million.
Additionally, the primary deficit decreased by 7% on a monthly basis to reach $843 million in November. Imports of goods fell 10% to $4.136 billion, while imports of services fell 13% to $828 million.
Total goods exports rose 3% year-on-year to $2.775 billion, but fell 8% month-on-month in November.
Remittances saw a 5% month-on-month decline, but increased 29% year-on-year to $2.9 billion in November. Remittances from Pakistani citizens working abroad increased by 34%, totaling $14.8 billion in the five months to November, compared to the same period last year.
The improvement follows the country’s crackdown on unofficial buying and selling of dollars.
“The current account surplus improved on the back of a notable reduction in the trade and services deficit, coupled with lower interest and dividend repatriations for the month,” said Awais Ashraf, director of research. at AKD Securities Limited.
“In addition, the decline in remittances was offset by an increase in personal transfers in November,” Achraf added.
The latest balance of payments data was released after the State Bank of Pakistan (SBP) reduced its policy interest rate by 200 basis points to 13 percent for the fifth consecutive time this year. This brings the total reduction to 900 basis points since June 2024.
At an analyst meeting after the monetary policy meeting, SBP Governor Jameel Ahmad predicted that Pakistan would post a large current account surplus in November, driven by improved remittance inflows and better performance for export.
The SBP projects the current account deficit to be at the lower end of the 0-1 percent of GDP projected for FY25.
According to Ahmad, remittances are experiencing increasing momentum, with the trend in the first two weeks of December surpassing that of previous months.
Finance Minister Muhammad Aurangzeb expects remittances to reach a record high of $35 billion this year, up from $30 billion last year. This growth is supported by a narrowing of the gap between interbank and free market exchange rates, as well as favorable policies.
Regarding external reimbursements, the governor said that out of a total amount payable of $26.1 billion, $10.4 billion has already been paid or deferred. The remaining debt repayment for the fiscal year, excluding planned refinancing, amounts to $5 billion.
Ahmad pointed out that the expected inflows in Q3FY25 from official channels would roughly equal the outflows of $2 billion. Therefore, any central bank intervention in the interbank market will help build foreign exchange reserves.
It forecasts that foreign exchange reserves will exceed the level of $13 billion by the end of June 2025.
APPLICATION adds: Meanwhile, in a press release issued by the Prime Minister, Prime Minister Shehbaz Sharif expressed satisfaction over achieving a record current account surplus in November.
“For the first time in 10 years, Pakistan’s current account surplus reaching $729 million in November 2024 is extremely encouraging for the national economy,” he said.
He highlighted that the SBP’s reduction in policy rate, gradual decline in inflation rate and increase in current account surplus were clear evidence of the government’s positive economic policies.
“Pakistan’s position in the international economic market will strengthen with a record increase in current account surplus,” he added.
He noted that the increase in current account surplus would also increase the confidence of local and foreign investors in Pakistan’s economy.
Shehbaz also thanked the Finance Minister, Minister of State for Finance Ali Pervaiz Malik and the government’s economic team for their tireless efforts.
Meanwhile, chairing a cabinet meeting, the Prime Minister said the central bank’s announcement of interest rate reduction from 2% to 13% would help boost investments in the country and spur growth. economic.
“Taking advantage of the good news on the economic front, we must first promote domestic investment, so that foreign investment will automatically come to the country,” the Prime Minister said.
Addressing the continuing challenge of polio eradication, the Prime Minister regretted that even though the polio virus had been almost eradicated worldwide, Pakistan still faced hurdles in becoming a polio-free country.
He stressed the need to overcome these challenges and reaffirmed the government’s commitment to eliminating the disease.
Shehbaz also expressed deep sadness over the tragic loss of Pakistani lives in the recent capsizing of a boat near Greece. Welcoming the recent positive indicators, the Prime Minister noted that the reduction in the policy rate would provide relief to businesses and investors.
He further highlighted that the inflation rate had fallen to its lowest level since 2018, which is an important development for the economy.
Shehbaz highlighted the importance of promoting local investments and announced that the government has finalized a local economic plan, which will soon be officially unveiled at a special event.