Current account surplus reaches $729 million in November, highest since 2015

KARACHI: In November, Pakistan achieved its highest current account surplus in almost a decade, driven by a decrease in trade and services deficits, as well as reduced interest and dividend repatriations, The News reported.

The country recorded a current account surplus of $729 million, the highest since February 2015, compared to a surplus of $346 million in the previous month and a deficit of $148 million in November 2022, as per data released by the central bank.

This marks the fourth consecutive month of surplus. In the first five months of the fiscal year 2025, Pakistan generated a current account surplus of $944 million, a significant improvement from the $1.67 billion deficit recorded during the same period last year.

The substantial month-on-month surplus of 111 percent in November resulted from a 14 percent reduction in the trade deficit, which fell to $1.361 billion, and a 43 percent decrease in the services deficit, now at $152 million. Additionally, the primary deficit dropped seven percent to $843 million. Goods imports decreased by 10 percent to $4.136 billion, while services imports declined by 13 percent to $828 million. Total goods exports saw a three percent increase year-on-year to $2.775 billion, although they decreased by eight percent month-on-month in November.

Remittances fell by five percent month-on-month but rose by 29 percent year-on-year, reaching $2.9 billion in November. The total amount sent home by Pakistanis working abroad surged by 34 percent, totalling $14.8 billion in the five months up to November compared to the previous year’s figures. This improvement follows the country’s efforts to eliminate unofficial currency exchange practices.

This balance of payments data was published after the State Bank of Pakistan (SBP) cut its key interest rate by 200 basis points to 13 percent, marking the fifth consecutive reduction this year and a total cut of 900 basis points since June 2024.

During an analyst briefing following the monetary policy meeting, SBP Governor Jameel Ahmad forecasted a substantial current account surplus for November, attributed to increased remittances and stronger export performance.

Ahmad noted a growing trend in remittances, with figures for the first two weeks of December exceeding those from previous months. Finance Minister Muhammad Aurangzeb anticipates remittances to reach a record high of $35 billion this year, up from $30 billion last year. This increase is supported by a shrinking gap between the interbank and open market exchange rates alongside favorable policies.

Regarding external repayments, he said out of a total of $26.1 billion due, $10.4 billion has already been paid or extended. The remaining debt repayment for the fiscal year, excluding expected rollovers, amounts to $5 billion.

Ahmad emphasized that inflows projected for the third quarter of FY25 from official sources would roughly match the outflows of $2 billion. As a result, any interventions by the central bank in the interbank market would support the build-up of foreign exchange reserves. He anticipates that these reserves will exceed $13 billion by the end of June 2025.