Pakistan’s Balance of Payments Swings to $4.39b Deficit in September
The Pakistan balance of payments deficit widened sharply in September, swinging to $4.39 billion from $118 million in August, according to fresh State Bank of Pakistan data. The current account deficit also widened, reaching $356 million against $73 million a month earlier.
For the first quarter of fiscal year 2026-27, the balance recorded a $3.12 billion deficit, reversing the $274 million surplus of a year earlier, as the gap between foreign earnings and payments grew.
Pakistan balance of payments deficit driven by wider trade gap
The goods trade deficit remained the largest drag on the external account. It widened 21.1 per cent to $9.33 billion during July-September as imports grew nearly twice as fast as exports.
Goods imports rose 14.3 per cent to $17.78 billion in the quarter, up from $15.56 billion a year earlier. Goods exports grew 7.7 per cent to $8.45 billion, against $7.85 billion in the same period last year. The current account deficit for the quarter stood at $874 million, compared with $755 million a year earlier.
September alone showed the same pattern. Goods exports jumped 15.5 per cent year-on-year to $3.02 billion, reversing a 1.5 per cent decline in August. But imports grew faster, rising 22.7 per cent to $6.17 billion from $5.03 billion a year earlier. The monthly goods trade deficit therefore widened to $3.16 billion from $2.42 billion.
Services exports and remittances provide some cushion
There was better news on services. Pakistan’s services exports increased 22.8 per cent to $2.72 billion in the first quarter, up from $2.21 billion a year earlier. Telecommunications, computer and information services remained a major contributor, generating $1.25 billion during July-September against $1.06 billion last year.
Other business services and travel services exports also rose, while services imports grew to $3.55 billion from $3.05 billion. The services trade deficit narrowed slightly to $831 million from $840 million.
Workers’ remittances remained a key support, rising 14 per cent to $10.88 billion in the quarter from $9.54 billion last year. However, monthly remittances slipped to $3.59 billion in September from $3.66 billion in August, a decline of about 1.9 per cent. The secondary income balance, which includes remittances and other transfers, reached $11.61 billion against $10.06 billion a year earlier.
The primary income deficit widened slightly to $2.32 billion from $2.27 billion, as income payments abroad of $2.56 billion far exceeded credits of $244 million.
Investment flows paint a mixed picture
Foreign direct investment inflows rose to $720 million in the first quarter, up 20 per cent from $600 million last year. But the monthly pace slowed, with September inflows of $219 million against $322 million in August.
Portfolio investment brought a net inflow of about $2.93 billion in the quarter, reversing a $631 million outflow a year earlier, with September alone contributing $2.87 billion in debt securities. Even so, the financial account recorded a $4.16 billion net outflow.
Gross foreign exchange reserves stood at $22.88 billion in September against $18.49 billion in August, and the central bank’s reserve-assets measure rose $4.38 billion. SBP reserves have been rebuilding, which helps explain how reserves can rise even as the overall balance shows a deficit.
The rupee closed at 276.91 against the dollar on Friday, up Rs0.01. Gold prices rose Rs2,800 per tola to Rs440,636, tracking the global market, and silver hit a record Rs6,256 per tola.
What this means for Pakistan’s economy
The data underline a familiar tension. Exports are recovering, led by readymade garments and IT services, but import demand is growing faster. For readers following the textile sector, the numbers matter directly: the industry has warned that higher input costs could slow shipments further in the second quarter.
If imports keep outpacing exports at this pace, the current account will stay under pressure through the rest of the fiscal year.
*Source: The Express Tribune, based on State Bank of Pakistan balance of payments data.*
Frequently asked questions
What is the balance of payments?
The balance of payments records all economic transactions between Pakistan and the rest of the world: trade, income flows, transfers like remittances, and investment flows. A deficit means more money left than came in.
Why did Pakistan’s balance of payments deficit widen in September?
Goods imports rose 22.7 per cent year-on-year to $6.17 billion, while exports grew 15.5 per cent to $3.02 billion. The merchandise trade deficit remains the largest component of the imbalance.
How much were remittances in the first quarter?
Workers’ remittances rose 14 per cent to $10.88 billion during July-September 2026, up from $9.54 billion a year earlier. Monthly remittances dipped 1.9 per cent in September to $3.59 billion.
Did foreign exchange reserves rise despite the deficit?
Yes. Gross foreign exchange reserves stood at $22.88 billion in September, up from $18.49 billion in August, helped by portfolio inflows and other financing.
