ISLAMABAD – The Federation of Pakistan Chambers of Commerce & Industry (FPCCI)’s Businessmen Panel (BMP) has said that third consecutive month’s current account surplus is fine but challenges remain as the trade deficit is widening, with imports surpassing $5 billion, enhancing risk for external account stability.
FPCCI former president and BMP Chairman Mian Anjum Nisar warned that rising energy prices or a slowdown in remittances could strain the country’s external finances. Anjum Nisar said that export earnings rose to $3 billion in December 2024, a 10 percent year-on-year (YoY) increase, exceeding the monthly average of $2.6 billion over the past year. Meanwhile, imports averaged $4.7 billion, resulting in a $1.7 billion trade deficit for the month. However, SBP reported a trade deficit $719 million lower than the Pakistan Bureau of Statistics (PBS). This discrepancy highlights the differing accounting methods used SBP employs a cash-based approach, while PBS uses accrual-based accounting, which includes deferred payment settlements. For 1HFY25, the trade deficit figures reported by SBP and PBS remain close, at $11.5 billion and $11.2 billion, respectively.
Anjum Nisar said that the financial account recorded a deficit in December 2024 due to debt repayments to banks. However, fresh loans of $733 million and foreign direct investment (FDI) inflows of $199 million provided partial support. As a result, the overall balance of payments (BoP) showed a minor deficit of $73 million for December. Despite external debt repayments, the cumulative BoP surplus for 1HFY25 stands at $1.7 billion, reflecting resilience, they wrote. This surplus stabilised SBP’s foreign exchange reserves at $11.7 billion, with import cover improving to 2.8 months, the highest in nearly three years.
He said that this positive trend is attributed to improved exports, robust remittances driven by mass human resource migration, moderate international commodity prices, and reduced non-essential imports due to declining purchasing power. For the first half of fiscal year 2024–2025 (1HFY25), the cumulative CA surplus reached $1.2 billion, a sharp contrast to the $1.4 million deficit recorded in the same period last year. Export revenues climbed to $3 billion in December, marking a 10 percent year-on-year growth and surpassing the monthly average of $2.6 billion over the past year. The continuous surplus in the current account for October, November, and December 2024 reflects the right direction of economic policies, he stated. The positive indicators reflect growing trust in the government’s economic policies, he said, adding that programmes like “Uraan” will further strengthen the economy.
He attributed the surplus to robust remittance inflows, which outpaced the trade deficit, alongwith a relatively lower services deficit. Revised figures, however, disrupted the streak of monthly surpluses, with the State Bank of Pakistan reporting deficits of $59 million for August and $21 million for September 2024. Despite these adjustments, the cumulative Pakistan recorded a net FDI inflow of $170 million in December 2024, down from $219 million in November. However, net FDI inflows for 1HFY25 grew by 20 percent YoY to $1.3 billion, compared to $1.1 billion in the same period last fiscal year. For fiscal year 2024–2025 (FY25), the SBP projects a CA balance within 0 percent–1 percent of GDP. JS Global noted that this target is achievable, supported by a balanced trade deficit and steady remittance inflows.
Experts attributed the improved CA surplus to better exports, strong remittances, moderate global commodity prices, and curtailed non-essential imports due to reduced purchasing power. He noted, however, that the trade deficit widened in December as imports surpassed $5 billion, underscoring challenges in sustaining external stability. Pakistan’s reliance on remittances and global demand for its exports remains a key vulnerability, they remarked. He cautioned that rising energy prices or declining remittances could affect future performance.
