By Farooq Awan
For the first time in fourteen years, Pakistan recorded a current account surplus in fiscal year 2024–25 — a major turnaround that signals growing economic stability.
The improvement, worth US$2.1 billion, was driven by record-breaking remittances, steady imports, and a stronger rupee supported by rising foreign exchange reserves.
A Surplus After Years of Deficits
The State Bank of Pakistan (SBP) said in its Annual Report 2024–25 that this was the country’s largest surplus in twenty-two years, following a US$2.07 billion deficit just a year earlier.
The report credited the turnaround to better policy coordination, a stable exchange rate, and steady inflows from Pakistanis working overseas.
Domestically, lower inflation and new incentives for using formal remittance channels helped attract higher inflows. Globally, stronger growth in Gulf economies and lower living costs in host countries allowed Pakistani workers to send more money home.
Remittances Reach Record Levels
Remittances soared from US$30.25 billion in FY24 to US$38.3 billion in FY25, marking a 26.5 percent jump. These transfers became Pakistan’s largest single source of foreign exchange. The SBP and government introduced digital payment options and wallet-based systems to make sending money easier and cheaper.
Foreign exchange reserves also nearly doubled, rising from US$9.4 billion to US$14.5 billion. The increase came from IMF program disbursements, financing from China and Saudi Arabia, and new funds from the World Bank and Asian Development Bank after Pakistan secured a new Extended Fund Facility in mid-2024.
Rupee Stability Restores Confidence
The stability of the rupee played a central role in rebuilding market confidence. The currency depreciated only 1.9 percent during FY25, compared with over 28 percent in FY23.
A calmer exchange rate helped contain imported inflation, allowing the central bank to bring down interest rates and ease financial pressure on households and businesses.
Exports Grow Modestly, Imports Rise for Industry
Exports increased 4.3 percent, supported by higher output in textiles and digital services. The textile sector performed better due to energy-efficient upgrades and a stable currency that improved competitiveness.
Meanwhile, the ICT sector continued its strong streak, recording a third consecutive year of double-digit growth.
Imports grew 11.2 percent, largely because industries needed more raw materials and food and energy stocks were replenished.
However, global price drops in oil and key commodities kept the overall import bill manageable.
Pakistan’s Strongest External Position in Decades
According to the SBP, FY25 marked Pakistan’s best external performance in more than twenty years. The surplus, coupled with IMF inflows, allowed the central bank to buy foreign currency from the market, further strengthening reserves.
Foreign direct investment showed a slight rise, while portfolio investment saw minor outflows due to international market uncertainty.
The surplus also gave the SBP room to lower interest rates, spurring business lending and private-sector activity. Global credit rating agencies responded by upgrading Pakistan’s outlook from CCC+ to B- between April and August 2025, citing reduced external risk.
Risks and Long-Term Outlook
The SBP cautioned that external stability could still face threats from oil price hikes, adverse weather affecting exports, and tight global financial conditions.
To keep the momentum going, the report called for broader reforms, including expanding exports, encouraging value-added manufacturing, and deepening domestic financial markets to improve savings and investment.
It also noted that while remittances remain strong, they may flatten if job demand abroad slows. The SBP suggested channeling these inflows into productive sectors like housing, small business finance, and local manufacturing to ensure sustainable benefits.
Relief for Citizens and Businesses
For everyday Pakistanis, the surplus brought practical relief — lower fuel prices, fewer currency shocks, and relaxed import restrictions that had earlier made goods scarce and expensive.
FY25, the report said, represents a turning point in Pakistan’s economic story — proof that steady policies, financial discipline, and the continued trust of overseas Pakistanis can turn persistent deficits into stability and growth.
Author Profile
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Farooq Awan is a meticulous finance correspondent focused on Pakistan’s growth engines.
His reporting, driven by State Bank data, details the services sector's resilience and 3% expansion as the primary force behind GDP recovery. Awan highlights the critical role of ICT and stable policy in driving this essential economic digital transformation.
