Pakistan's Current Account Slips into $139 Million Deficit in FY26

Pakistan concluded the fiscal year 2025-26 with a current account deficit of $139 million, a notable shift from the $1.838 billion surplus recorded in 2024-25. The State Bank of Pakistan reported this reversal on Friday, attributing the deficit's containment largely to robust remittance inflows throughout the year. These inflows increased to $41.585 billion in FY26, up from $38.3 billion in FY25, representing a rise of approximately $3.3 billion.

The deficit was largely anticipated, particularly following the Gulf war's disruption of oil prices and its subsequent impact on Pakistan's economy. However, the overall deficit remained manageable due to the consistent flow of remittances. This contrasts with a sharper monthly deficit observed in June 2026, which stood at $649 million, compared to a surplus of $500 million in May 2026. In June 2025, the current account had registered a surplus of $220 million, indicating a shifting economic trend.

Foreign direct investment also saw a decline, falling 34% to $1.64 billion during the fiscal year. This economic picture suggests a challenging period for Pakistan's external balance, with the current account deficit widening and FDI decreasing, despite the crucial support provided by overseas workers' remittances.