Pakistan Current Account: $479m Surplus in February & FY26 Deficit Reduction

Karachi – Pakistan’s current account registered a surplus of $479 million in February, a significant shift that’s easing pressure on the country’s external finances. The State Bank of Pakistan (SBP) shared the data on Monday, revealing a marked improvement from the $244 million deficit recorded in December 2025. As reported by Dawn, this marks the first time the current account has shown a surplus in two months of the calendar year 2026.

A Volatile Trend in Fiscal Year 2026

While February’s surplus is encouraging, the broader picture for the first two quarters of fiscal year 2026 (FY26) reveals a more complex trend. The current account remained in deficit during this period, contrasting with the $1.9 billion surplus seen in FY25. Specifically, the deficit totaled $737 million from July to September 2025, and $458 million from October to December 2025. Though, the tide appears to be turning, with a $85 million surplus in January preceding February’s stronger showing.

The improvement is largely attributed to a substantial reduction in imports, which has helped to balance the country’s external position. However, this reduction has had a dampening effect on Pakistan’s economic growth, with the GDP reaching only 3% in FY25. This illustrates a key trade-off: while curbing imports can stabilize the current account, it can also hinder economic expansion.

Import Dynamics and Global Factors

Between July and February, imports of goods increased by $3.38 billion, reaching $41.823 billion compared to $36.433 billion during the same period last fiscal year. Simultaneously, both exports and imports of services saw increases of $1 billion and $1.1 billion, respectively. This suggests that while overall import volume is rising, the composition of imports may be shifting towards goods and services that are more essential or strategically important.

Financial experts caution that sustaining this positive trend will be challenging. A major factor is the rising price of oil in the international market, which has surpassed $100 a barrel due to geopolitical tensions in the Middle East. Further escalation of the conflict could push prices even higher, potentially offsetting the gains from reduced import volumes.

Impact on Pakistan’s Economy

The current account deficit has long been a significant challenge for Pakistan’s economy, contributing to balance of payments pressures and currency depreciation. A sustained surplus, or even a significantly reduced deficit, would provide much-needed stability and allow the SBP to build up its foreign exchange reserves. This, in turn, could support to attract foreign investment and support economic growth.

However, the SBP data, as market sources point out, doesn’t fully reflect the impact of the recent Middle East conflict, which began on February 28th. The full extent of the oil price shock and its implications for Pakistan’s current account will likely become clearer in the coming months. The country’s reliance on imported energy makes it particularly vulnerable to fluctuations in global oil prices.

Sectoral Implications and the Role of Services

The increase in both exports and imports of services is a noteworthy development. Pakistan’s services sector, which includes IT, telecommunications, and financial services, has been a growing source of foreign exchange earnings. The rise in service imports could reflect increased investment in technology and infrastructure, or higher costs for outsourced services. Further analysis is needed to determine the specific drivers of this trend.

The State Bank of Pakistan’s Summer Internship Program 2026, announced recently, as detailed on their website, aims to attract young talent to contribute to the country’s economic development. The six-week program, running from June 29 to August 7, 2026, is open to students with a minimum of 70% marks or a CGPA of 3.00, and is targeted at those studying economics, business administration, finance, mathematics, and related fields. This initiative underscores the SBP’s commitment to building a skilled workforce capable of addressing the country’s economic challenges.

Looking Ahead: Monitoring Key Indicators

The current account’s performance in the coming months will depend on a number of factors, including global oil prices, the trajectory of imports and exports, and the overall health of the global economy. The SBP will be closely monitoring these indicators and adjusting its monetary policy accordingly. The impact of the Middle East conflict remains a key uncertainty, and any further escalation could significantly impact Pakistan’s external finances.

The next key data release will be the current account figures for March, which will provide a more comprehensive picture of the trend. Investors and policymakers will be looking for signs that the surplus is sustainable, or whether it was a temporary blip. The SBP’s ability to manage the current account will be crucial for maintaining macroeconomic stability and fostering long-term economic growth. PakObserver also reported on the SBP’s internship program, highlighting the focus on attracting top talent.

the government’s efforts to attract foreign investment and boost exports will be critical in supporting the current account. The implementation of structural reforms aimed at improving the business environment and enhancing competitiveness will also be essential. The path to sustainable economic stability will require a coordinated effort from all stakeholders.