Pakistan’s current account surplus returned in November as the State Bank of Pakistan (SBP) reported a positive balance of USD 100 million, marking a clear turnaround from the USD 291 million deficit recorded in October. This shift reflects short-term improvements in external balances and highlights the impact of narrowing trade and services gaps amid stabilizing economic conditions.
The current account surplus was primarily driven by a notable reduction in import-related pressures. According to SBP data, the trade deficit in November 2025 declined by 11 percent to USD 2.454 billion, while the services deficit dropped sharply by 41 percent to USD 140 million. These improvements helped offset ongoing challenges related to rising imports and global economic uncertainty.
A Month-on-Month Improvement, but Below Last Year
While the return to surplus is a positive sign, it is important to view it in context. The current account surplus of USD 100 million in November 2025 was significantly lower than the USD 709 million surplus recorded in November 2024. This comparison highlights the pressures Pakistan has faced over the past year, particularly from higher import bills and a widening trade gap.
Nevertheless, analysts note that even a modest surplus reflects better external account management compared to earlier months, especially after October’s deficit.
Volatile Trend in FY26 So Far
Pakistan’s external account has shown considerable volatility during the first five months of the current fiscal year (FY26). The period from July to November alternated between deficits and surpluses, reflecting shifting trade dynamics and capital flows.
The current account recorded a deficit of USD 254 million in July 2025, which widened to USD 325 million in August. September brought temporary relief with a surplus of USD 100 million, followed by another deficit of USD 291 million in October. November then saw the return of a current account surplus of USD 100 million.
On a cumulative basis, the picture remains challenging. During July–November FY26, the current account posted a deficit of USD 812 million, compared with a surplus of USD 503 million in the same period last year. This reversal underscores the structural pressures on Pakistan’s external sector.
Trade Deficit Remains the Key Challenge
Economists attribute the deterioration in the first five months largely to a nearly 30 percent surge in the trade deficit. Rising imports, driven by improving domestic economic activity, outweighed positive contributions from higher remittances and reduced interest and dividend repatriation.
Despite the November current account surplus, analysts caution that sustained improvement will depend on managing import growth while boosting exports and maintaining strong remittance inflows.
SBP and MPC Outlook Remains Cautiously Optimistic
According to the SBP, the current account performance is broadly in line with expectations. Imports continue to rise in tandem with economic recovery, while workers’ remittances have remained resilient, providing a stable source of foreign exchange.
The Monetary Policy Committee (MPC), in its latest assessment, maintained its outlook for the external account. It projected that the current account deficit would remain within 0 to 1 percent of GDP in FY26. This suggests that while monthly fluctuations are likely, overall external stability is expected to be maintained.
The return to a current account surplus in November supports this view, indicating that the balance can swing positive when trade and services gaps narrow.
Foreign Exchange Reserves Cross Key Milestone
Another positive development accompanying the November surplus is the improvement in foreign exchange reserves. With the receipt of funds from the International Monetary Fund under the Extended Fund Facility (EFF) and the Resilience and Sustainability Facility (RSF), along with continued FX purchases, SBP’s reserves have surpassed a critical benchmark.
As of December 12, 2025, SBP-held reserves reached USD 15.8 billion, exceeding the December target of USD 15.5 billion. This reserve buildup provides a stronger buffer against external shocks and supports currency stability.
Looking ahead, with the realization of planned official inflows, SBP projects its foreign exchange reserves to strengthen further to USD 17.8 billion by June 2026. This outlook adds credibility to the broader macroeconomic stabilization narrative.
What the November Surplus Means Going Forward
The November current account surplus is a welcome signal, but it does not eliminate underlying challenges. Structural trade imbalances, dependence on imports, and global economic risks continue to pose headwinds. However, improved reserves, IMF support, and steady remittances provide important cushions.
If export growth gains momentum and imports are managed prudently, Pakistan could see fewer sharp swings in its external account. For now, the November surplus stands as a reminder that disciplined economic management can yield tangible results—even in a volatile global environment.
