Current account surplus widens in March

KARACHI: Pakistan’s current account surplus significantly increased in March, compared with the previous month, helped by lower goods and services trade deficits and robust remittances.

Data from the State Bank of Pakistan (SBP) on Thursday showed the current account surplus rose to $1.07 billion in March, from a surplus of $231 million in February. However, the surplus dropped by 16 per cent year-on-year (YoY). This is the third consecutive monthly surplus this year.

The country chalked up a current account surplus of just $8 million in the nine months of the fiscal year 2026, down from $1.674 billion in the same period of FY25. The balance of payments figures follow Pakistan’s receipt of funds from Saudi Arabia, which provides a crucial lifeline to shore up its foreign exchange reserves and manage an upcoming loan repayment to the United Arab Emirates (UAE).

“The State Bank of Pakistan has received funds of $ 2 billion from the Ministry of Finance, Kingdom of Saudi Arabia in the value date of April 15, 2026,” the SBP said on the social media platform X.

The $2 billion inflow from Saudi Arabia is a liquidity-supporting, non-market buffer, said Dr Khaqan Najeeb, former adviser to the Ministry of Finance.“It strengthens SBP reserves, improves near-term confidence and supports exchange rate stability,” Najeeb said. “It also helps cover shortfall of return of money to the UAE. However, as a deposit-type inflow, it is debt-creating and reversible, not a structural improvement in the balance of payments,” he added.

According to Najeeb, the current account surplus in March signals compression in imports alongside resilient remittances. “This suggests demand management is working but also reflects subdued domestic activity rather than export-led strength,” he said.

The government announced that Saudi Arabia has pledged an additional $3 billion in deposits for Pakistan and has extended its existing $5 billion facility for another three years to help support the South Asian nation’s balance of payments. Pakistan is facing a $3.5 billion debt repayment to the UAE this month, which has put a strain on its FX reserves.

The central bank’s reserves dropped by $1.321 billion to $15.1 billion in the week ending April 10. Reserves held by the country also declined by $1.37 billion to $20.525 billion, while those of commercial banks fell by $50 million to $5.445 billion. The decline in reserves is attributed to the repayment of $1.426 billion against Pakistan Sovereign Eurobond, the SBP said in the statement.