Pakistan posts around $2bn current account surplus

June 02, 2025 (MLN): Pakistan’s external sector improved notably in FY2024-25, with the current account showing a surplus of $1.88 billion from July to April, compared to a deficit during the same period last year.

This positive shift reflects growing resilience, even though the trade deficit widened and income from abroad declined, according to a copy of the Annual Plan Review 2024-25 available to Mettis Global, shared by the Planning Commission.

The industrial sector rebounded with 4.8% growth after a contraction of 1.4% in FY2023-24.

This recovery was primarily fueled by a 28.9% surge in electricity, gas, and water supply, rebounding from a 19.9% decline last year, and a 6.6% rise in construction, which had contracted by 1.1% previously.

However, the mining & quarrying sector continued to contract, declining by 3.4% compared to a 4% drop last year, due to ongoing challenges in mineral extraction and exploration.

Manufacturing underperformed, with growth slowing to 1.3% from 3.0% last year against a target of 4.4%.

Large-Scale Manufacturing (LSM) notably contracted by 1.5%, reversing a modest 0.9% growth from last year, highlighting persistent industrial weaknesses and subdued demand.

The services sector posted a modest 2.9% growth in FY2024-25, up from 2.2% last year. Wholesale & Retail Trade stagnated at 0.1% due to weak agriculture and LSM output.

Meanwhile, Information & Communication rose by 6.5%, Finance & Insurance by 3.2%, and Public Administration by 9.9%, with transport services also showing improvement.

National savings rose to 14.1% of GDP from 12.6% in FY2023-24. Domestic savings increased to 7.4% from 7%, driven by declining inflation that allowed households to save more.

Foreign savings stood at -0.4% of GDP, compared to 0.6% last year, indicating a current account surplus.

Pakistan's fiscal performance also improved. Total revenue during July-March FY2024-25 increased by 36.7%, reaching Rs13.3 trillion compared to Rs9.78tr last year.

Tax revenue rose by 25.8%, supported by a 25.9% increase in FBR collections and 24.2% growth in provincial taxes.

Total expenditure stood at Rs16.3tr, growing by 19.4%. The fiscal deficit narrowed to Rs2.97tr (2.6% of GDP) from Rs3.9tr (3.7% of GDP) last year and remained below the annual target of 5.9% of GDP.

Gross public debt stood at Rs76,007bn as of 31st March 2025, posting a growth of 6.7%. The debt-to-GDP ratio decreased to 66.3% from 67.8%.

Domestic debt rose to Rs51,517.9bn, constituting 68% of total debt, while external debt registered a slower growth of 1.7% to reach Rs24,489.1bn.

Workers’ remittances surged by 30.9% to $31.2bn during July-April FY2024-25, compared to $23.8bn in the same period last year.

This broad-based growth came from key countries including Saudi Arabia, UAE, USA, UK, GCC, and EU nations—driven by improved economic conditions, formal remittance channels, and favorable exchange rate policies.

FBR’s tax collection rose by 26.3% during July-April FY2024-25, mainly due to domestic taxes which contributed 28.8% and 63.5% in total net taxes.

Taxes at import stage increased by 22.3%. Collection improved through strict compliance, automation, enforcement, and revised tax rates in the budget.

Broad money (M2) increased by 3.78% from July 2024 to 2nd May 2025, compared to 7.04% in the same period last year.

This was driven by a sharp rise in Net Foreign Assets, which rose by Rs1.2tr from Rs590bn last year.

Inflation declined sharply in FY2024-25. Average CPI inflation (YoY) during July-April stood at 4.7%, down from 26% last year.

In April 2025, CPI inflation (YoY) dropped to 0.3% from 17.3% in April 2024. Urban food inflation was -1.9% and rural -4.6% in April 2025.

The trade in services deficit widened by 4% to $2.5bn during July-April FY2024-25 from $2.4bn last year. Imports of services rose by 7.9% to $9.43bn, while exports grew by 9.3% to $6.93bn—driven by ICT services, business services, and transport.

Pakistan's ICT exports surged by 21.1% to $3.14bn, contributing 45.3% of total services exports.

The rupee appreciated by 1.81%, reaching Rs278.8 against the US dollar during July-April FY2024-25 compared to Rs283.8 in the same period last year.

The Real Effective Exchange Rate (REER) index dropped to 99.42 in April 2025 from 104.44 last year, aligned with lower inflation. Pakistan's liquid foreign reserves rose by $1.6bn to $15.6bn by 9th May 2025, up from $14bn in June 2024.

The State Bank of Pakistan received the second tranche of SDR 760m ($1.02bn) from the IMF under the EFF Program, expected to further support foreign exchange reserves.

Pakistan's total external debt and liabilities stood at $130.3bn at the end of March 2025, slightly down from $131bn in June 2024.

Public external debt rose to $99.2bn from $98.3bn. Debt repayments reached $7.5bn during July-March FY2024-25, up from $6.5bn last year.

Interest payments totalled $3.99bn, slightly above $3.95bn from the previous year.

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