Pakistan’s overall balance of payments (BoP) swung to a deficit of $4.39 billion in September, compared with a deficit of $118 million in August, according to State Bank of Pakistan (SBP) data. The current account deficit also widened to $356 million from $73 million a month earlier.
Background
The balance of payments records all money flowing in and out of the country, including trade, services, income and financial transactions. The current account, which covers trade in goods and services, income and remittances, is the part most closely watched because it shows whether Pakistan is earning enough foreign exchange to pay for its imports.
The latest figures cover the first quarter of fiscal year 2026-27, which runs from July to September. They come as imports have picked up with economic activity, while exports have not grown as quickly.
Details
For the July-September period, the BoP recorded a deficit of $3.12 billion, against a surplus of $274 million in the same quarter last year. Over the quarter, the current account deficit stood at $874 million, compared with $755 million a year earlier.
The goods trade deficit increased 21.1 percent to $9.33 billion in the first quarter, because imports expanded faster than exports, according to Minute Mirror. The merchandise trade gap remains the largest component of the imbalance.
There was some improvement in services. The services trade deficit narrowed slightly to $831 million from $840 million a year earlier, helped by technology-related services, whose exports reached $1.25 billion in July-September, up from $1.06 billion. The primary income deficit, which includes payments on foreign debt and investments, widened slightly to $2.32 billion from $2.27 billion.
The data also show a notable reserve figure. The central bank’s reserve-assets measure recorded an increase of $4.38 billion in September, even as the overall BoP is reported as a deficit of $4.39 billion. A separate summary of the SBP table put gross foreign exchange reserves at $22.88 billion in September, up from $18.49 billion in August.
Quotes
The SBP data did not come with an official commentary in the reports reviewed. Coverage noted that the recovery in exports has yet to keep pace with the expansion in import payments, and that stronger export earnings, particularly from goods and technology-related services, have not yet offset the rise in imports.
Impact
A widening current account gap can put pressure on the rupee and on reserves if it is not financed by inflows. It is also a key number for the International Monetary Fund (IMF) programme, since the Fund has projected Pakistan’s current account deficit for the year at about 1 percent of gross domestic product, or roughly $4.4 billion.
At $874 million for the first quarter, the shortfall is still well within that range, but the faster rise in imports shows how quickly the position can change when growth picks up. Services exports, especially IT, are providing a partial offset.
Conclusion
Attention now turns to the October data and to remittances, which usually help narrow the current account gap. Economists will also be watching oil prices and import demand for signs of whether the deficit continues to widen in the coming months.
Frequently Asked Questions
What does the $4.39 billion BoP deficit mean?
The overall balance of payments combines the current account with the capital and financial accounts. SBP data show it swung to a deficit of $4.39 billion in September from a deficit of $118 million in August, and the July-September deficit was $3.12 billion, against a $274 million surplus a year earlier. It signals that more foreign exchange left the country than came in during the period, though the same data show reserve assets rising, so readers should check the full SBP table for details.
How big was the current account deficit?
The current account deficit was $356 million in September, up from $73 million in August. For the first quarter of FY2026-27, it was $874 million, compared with $755 million a year earlier. The goods trade deficit rose 21.1 percent to $9.33 billion, which was the main driver, while the services deficit narrowed slightly to $831 million.
Why are imports rising faster than exports?
Reports say imports have expanded faster than exports, with merchandise trade remaining the largest source of the gap. Export earnings, including technology-related services, which rose to $1.25 billion from $1.06 billion, have grown but not by enough to offset higher import payments. The primary income deficit also widened slightly to $2.32 billion.
