KARACHI: Pakistan’s current account recorded a marginal deficit of $139 million in FY26, reversing a surplus of $1.84 billion in the previous fiscal year, according to data released by the State Bank of Pakistan (SBP) on Friday.
Despite record workers’ remittances, Pakistan’s external account was pushed into negative territory by high imports, while exports remained largely stagnant during the outgoing fiscal year.
The deterioration in the current account was largely driven by a widening trade gap. The country’s goods trade deficit expanded to $33.6 billion in FY26, up from $26.8 billion in FY25, as import growth outpaced exports.
Merchandise exports slipped to $30.8 billion, a decline of roughly 4.6 percent from $32.3 billion the previous year, while imports climbed nearly 9 percent to $64.5 billion from $59.1 billion.
On a monthly basis, Pakistan posted a current account deficit of $649 million in June 2026, compared with a surplus of $500 million in May 2026. In June 2025, the country had recorded a current account surplus of $220 million.
Current Account Balance (CAB) recorded a deficit of $649 million in Jun 2026 compared to a surplus of $500 million in May 2026, and a surplus of $220 million in June 2025. Cumulatively, CAB recorded a deficit of $139 million during FY26 compared to a surplus of $1,838 million in… pic.twitter.com/JAUwTEvDmN
— SBP (@StateBank_Pak) July 17, 2026
Analysts Flag Caution Despite Near-Balanced Headline Figure
Brokerage house Topline Securities attributed the June shortfall to a combination of a heavier import bill and softer remittance inflows during the month, which tipped the cumulative full-year figure into negative territory.
Topline’s Saad Hanif noted that June’s deficit was the widest of the fiscal year, and warned that if a similar pace carries into FY27, the annual current account gap could widen considerably. That, he said, would argue for caution on the rupee and would likely limit the SBP’s room for further monetary easing from the current policy rate of 11.5 percent.
Hanif cautioned that the “near-balanced headline figure should therefore not be interpreted as evidence of durable external stability,” adding that the calm was underpinned largely by remittance inflows, with a sustained recovery in exports remaining essential in the new fiscal year.
Remittances Provide a Cushion
The deterioration in the trade account was partly offset by robust inflows of workers’ remittances, which rose to a record $41.6 billion in FY26, up from $38.3 billion in FY25, an increase of more than 8.5 percent. Remittances remain the single largest source of foreign exchange inflows recorded under secondary income, helping to keep the overall current account gap contained to a fraction of a percent of GDP.
As a share of the economy, the current account balance stood at roughly -0.03 percent of GDP in FY26, compared with a positive 0.45 percent the year before, reflecting how narrow the shortfall remained even as trade imbalances grew.
Reserves Climb Despite Weaker Investment Inflows
Foreign investment inflows softened over the year. Foreign direct investment into Pakistan fell to $1.64 billion in FY26 from $2.48 billion in FY25, while the broader financial account recorded a net outflow of $1.2 billion, narrower than the $1.6 billion outflow logged the prior year.
Even so, the central bank’s gross foreign exchange reserves rose sharply, reaching nearly $19.7 billion by the end of June 2026, up from $15.8 billion a year earlier, a gain of about 24 percent. The build-up came even as the country continued to make external debt repayments, including amortization on loans and credit facilities with the IMF.
Pakistan’s overall balance of payments deficit, which captures the net outcome of the current and financial accounts along with reserve movements, narrowed to $1.83 billion in FY26 from $3.74 billion in FY25, suggesting the external position, while still under pressure from a widening trade gap, was better supported than in the prior fiscal year.
Services and Primary Income
The services account also weighed on the external position, with the balance on trade in services falling to a deficit of $1.9 billion in FY26 from $2.8 billion in FY25, services exports rose to $10 billion from $8.5 billion, but this failed to fully keep pace with a rise in services imports. The primary income account, which includes profit repatriation and investment income, recorded a deficit of $8.4 billion, roughly in line with the $8.8 billion shortfall of the previous year.
