Pakistan posts highest current account surplus in 11 months, sees 95% improvement

KARACHI: Pakistan recorded its highest current account surplus in April after a span of nine months, driven by increased remittances and exports that collectively improved the current account situation by 95 percent in the ongoing fiscal year, according to data released by the central bank on Friday.
The country posted a monthly current account surplus of $491 million last month, the highest since June 2023. During the first 10 months of the current fiscal year (10MFY24), the country’s deficit decreased by 95 percent on a year-on-year basis to $202 million. This was in marked contrast to a deficit of $3.92 billion recorded in the corresponding period last year, as per the data released by the State Bank of Pakistan (SBP).
“Pakistan’s current account improvement was mainly driven by an increase in remittances, month-on-month export growth, along with a decline in imports,” Tahir Abbas, head of research at Arif Habib Limited, told Arab News.
Pakistan received $2.8 billion of workers’ remittances in April 2024, which is 27.9 percent higher on an annual basis. The total inflow of remittance stood at $23.8 billion in the 10-month period of FY24.
“The remittance inflows are mainly due to the upcoming Eid Al-Adha,” Abbas said, referring to a Muslim festivity that follows the Hajj pilgrimage in Makkah. “This is the major contributor to the overall current account improvement.”
The central bank statistics show the monthly information technology (IT) exports from Pakistan increased by 62 percent on an annual and one percent on a monthly basis in the month of April to $310 million.
“This is the highest ever export number in a single month, with the previous highest of $306 million recorded in March 2024,” Topline Securities, a Karachi-based brokerage firm, said in its report issued on Friday.
The monthly IT exports in April are higher than the last 12-month average of $245 million, the brokerage firm added.
The growth in IT exports is due to the expansion of local companies in the Gulf market, especially Saudi Arabia, a relaxation of the permissible retention limit by the SBP from 35 percent to 50 percent in the exporters’ specialized foreign currency accounts, allowing them greater control over their earnings, and stability in the national currency, according to Topline Security.
All of these factors have encouraged IT exporters to bring a higher portion of profits back to the country, it added.
The cumulative IT exports in the first 10 months of the fiscal year increased by 21 percent on an annual basis, reaching $2.59 billion, compared to $2.14 billion recorded in the corresponding period last year. The net IT export number in April is also higher than last 12-month average of $214 million.
The central bank released data on foreign direct investment (FDI) as well that hit $359 million, up 172 percent on a yearly and 39 percent on a monthly basis in April.
This is the highest monthly inflow in nearly four and a half years. The major FDI inflow of $177 million came from China. During the first 10-month period of the ongoing fiscal, the net FDI inflow increased by eight percent on an annual basis to $1.45 billion compared to an inflow of $1.35 million in the corresponding period last year.