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| Pakistan Posts Record-Breaking $1.2 Billion Current Account Surplus in March 2025 |
Pakistan Posts Record-Breaking $1.2 Billion Current Account Surplus in March 2025
In a significant and positive development for Pakistan's economy, the State Bank of Pakistan (SBP) has reported a record-high monthly current account surplus of $1.2 billion for March 2025. This figure represents a substantial turnaround from the $97 million deficit recorded in February 2025 and surpasses the $363 million surplus seen in March 2024.
This historic surplus marks the highest monthly figure ever recorded, offering a considerable boost to the country's external account position, which has faced persistent pressure in recent years.
Cumulative Picture Brightens
The positive March figures contribute to an improved outlook for the fiscal year. For the first nine months of the fiscal year 2024-2025 (9MFY25), Pakistan has recorded a cumulative current account surplus of $1.86 billion. This contrasts sharply with the $1.65 billion deficit registered during the same period in the previous fiscal year (9MFY24), highlighting a significant positive shift in the country's external balance over the past year.
What Drove the March Surplus?
The primary driver behind this remarkable performance was an unprecedented surge in workers' remittances. Overseas Pakistanis sent home a record $4.1 billion in March 2025. Key points regarding remittances include:
- Record High: This is the highest monthly remittance inflow ever recorded for Pakistan.
- Strong Growth: The figure represents a 37.3% increase compared to March 2024 ($2.95 billion) and a 29.8% rise from February 2025 ($3.12 billion).
- Cumulative Strength: Remittances for 9MFY25 reached $28.03 billion, a 33.2% increase year-on-year.
- Key Sources: Major contributions came from Saudi Arabia ($987.3 million), the UAE ($842.1 million), the UK ($683.9 million), and the US ($419.5 million).
- Contributing Factors: Analysts attribute this surge to seasonal effects (Ramadan/Eid), increased confidence encouraging flows through formal channels, and the success of government and SBP initiatives aimed at facilitating official remittance channels and curbing informal systems like hundi/hawala.
While remittances were the main engine, the trade balance also played a role. According to SBP data for March:
- Exports (Goods & Services): Rose 8.7% year-on-year and 5.9% month-on-month to $3.51 billion.
- Imports (Goods & Services): Increased 8.0% year-on-year but fell 1.9% month-on-month to $5.92 billion.
- Trade Deficit (Goods & Services): Narrowed by 11.5% compared to February 2025 but widened by 7.0% compared to March 2024, standing at $2.41 billion.
Economic Implications and Outlook
This record surplus provides several immediate benefits:
- Eases External Pressure: It offers a much-needed cushion for Pakistan's external financing requirements, particularly important ahead of potential negotiations with the International Monetary Fund (IMF).
- Supports Foreign Reserves: The inflows bolster the nation's foreign exchange reserves, crucial for import payments and debt servicing. SBP Governor Jameel Ahmad recently expressed confidence that reserves could exceed $14 billion by the end of June 2025.
- Strengthens the Rupee: Reduced demand for foreign currency helps stabilize the Pakistani Rupee.
- Boosts Confidence: Such positive data can improve investor sentiment and signal growing stability.
The SBP Governor has indicated optimism that the current account could remain in surplus for the full fiscal year ending June 2025. This aligns with broader signs of macroeconomic stabilization, including significantly lower inflation (around 1.0-1.5% expected for March) and moderate growth projections (ADB forecasts 2.5% GDP growth for FY25).
However, challenges remain. Sustaining this momentum requires continued focus on structural reforms, particularly in exports, energy sector viability, and attracting stable, long-term foreign direct investment. The Asian Development Bank (ADB) notes that Pakistan's outlook depends significantly on the successful implementation of ongoing reforms. External risks, such as volatile global commodity prices and potential shifts in global trade policies, also persist.
Conclusion
The $1.2 billion current account surplus in March 2025 is undeniably positive news for Pakistan's economy. Driven primarily by record remittances, it reflects increased confidence among overseas Pakistanis and provides vital support to the external sector. While a single month's data doesn't guarantee a long-term trend, it marks a significant achievement and strengthens Pakistan's position as it navigates its path towards sustained economic recovery and stability. Continued reform efforts will be critical to build on this success.
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