New Delhi, July 20 (IANS) Pakistan closed fiscal year 2026 with a near-balanced current account and stronger foreign exchange reserves, but the apparent improvement in its external position is largely driven by record remittance inflows rather than a meaningful expansion in exports or productivity, raising concerns about the sustainability of the country’s economic recovery, a report has said.
Pakistan posted a current account deficit of just $139 million in FY26, while the State Bank of Pakistan’s (SBP) foreign exchange reserves stood at around $18.4 billion at the end of June, nearly $4 billion higher than a year earlier before declining due to post-year-end external payments, according to the Business Recorder report.
Despite these headline gains, the country’s external stability remains heavily dependent on workers’ remittances rather than stronger export performance or improved international competitiveness.
According to the latest data, Pakistan recorded a goods and services trade deficit of about $35.5 billion during FY26.
After accounting for primary income payments, including interest and profit repatriation, the external gap widened to nearly $44 billion, the report stated.
The deficit was almost entirely offset by secondary income inflows of $43.8 billion, including a record $41.6 billion in workers’ remittances.
Goods exports declined during the year, while imports increased, indicating that the improvement in the current account was driven by remittance-financed imports rather than export-led growth.
The SBP also continued purchasing dollars from the interbank market to rebuild foreign exchange reserves following the country’s previous balance-of-payments crisis.
While this strengthened official reserves, analysts note that the accumulation reflects the central bank’s intervention to absorb excess foreign currency generated by remittance inflows rather than a structural increase in Pakistan’s external earning capacity.
The country’s growing dependence on remittances has also heightened its exposure to geopolitical developments in the Middle East, the report added.
–IANS
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