Pakistan's December current account surplus hits $582 million

Pakistan's current account recorded a surplus for the third month in a row — clocking in at $582 million — showing an increase of more than 100% from December 2023.

According to data released by the State Bank of Pakistan (SBP), the country also recorded a surplus of $684 million in November.

The current account landed in surplus because of higher remittances and exports, both of which were in excess of $3 billion.

The current account in six months of fiscal year 2024-25 (FY25) was in surplus of $1.2 billion, while in the same period last year, it was in deficit of $1.4 billion, according to SBP data.

Meanwhile, remittances during six months of FY25 were up by $4.4 billion to $17.8 billion and exports were up by $1.1 billion to $16.2 billion.

The surplus would have been more if imports had not picked up speedily in the last two months. Imports in six months were up by $2.4 billion to $27.7 billion.

Remittances have been on an upwards trajectory mainly because of stability in domestic currency. Since March last year, the rupee has been stable, moving in the vicinity of PKR 278 to PKR 279 in the interbank market and between PKR 280 to PKR 281 in the open market.

In 2023, rupee received heavy battering and dollar touched its highest peak of PKR 307 in the interbank market and PKR 333 in the open market. A gray market also emerged due to fear of default, where the dollar reached PKR 350.

However, following the agreement with the International Monetary Fund (IMF), things started to settle down and timely roll overs from China, Saudia Arabia and UAE helped to recover from the economic crisis.

Release of loans from IMF, World Bank, ADB, Asian Infrastructure Bank, and commercial loans taken out by the central bank helped the country's reserves reach $11.7 billion — enough to cover two months imports bill. However, the reserves are still short of covering three months worth of imports as demanded by the IMF.

According to Topline Securities, earlier the current account surplus in FY25's first five months was $944 million. However, the surplus has reached to $1.21 billion in six months, increasing by $266 million.

This suggests that data for previous months was adjusted to the extent of $316 million.

The central bank has revised current account numbers of July, August, September, and November. The large part of the revision is made in services deficit.

The December surplus was higher than expectations as trade deficit reported by SBP is 29% lower than PBS vs. historic average of 10%.