Pakistan's external account has returned to surplus on the back of record workers' remittances, providing a measure of stability despite a widening trade gap and leaving the government to pursue even more ambitious external sector targets in the coming fiscal year. According to data released by the State Bank of Pakistan (SBP), the country's current account recorded a surplus of USD459 million in May 2026, reversing a deficit of USD276 million in April and improving from a USD44 million deficit in May 2025. The turnaround was driven primarily by record remittance inflows and relatively lower import payments after the previous month's increase in energy imports had pushed the external account into deficit.
The strongest support came from overseas Pakistanis, whose remittances reached an all-time monthly high of USD4.251 billion in May, compared with USD3.539 billion in April and USD3.686 billion in the same month last year. The surge helped offset the country's sizeable merchandise trade deficit and reinforced the balance of payments at a time of continuing external challenges.
The monthly improvement also shifted the cumulative current account for the first eleven months of fiscal year 2025-26 into surplus. During July-May FY26, the current account registered a surplus of about USD255 million, compared with a surplus of USD1.618 billion during the corresponding period of the previous fiscal year, indicating that although the balance remained positive, it was substantially lower than a year earlier.
SBP data show that the trade imbalance remained considerable. During the first eleven months of FY26, the deficit in trade in goods reached USD30.205 billion, wider than the USD24.374 billion recorded a year earlier. Combined deficits in goods and services amounted to USD32.208 billion over the period, compared with USD27.006 billion in the corresponding months of FY25. In May alone, the combined trade deficit stood at USD3.290 billion.
Services trade, however, showed improvement. During July-May FY26, the services deficit narrowed to USD2.003 billion from USD2.632 billion a year earlier, while May 2026 recorded a services surplus of USD28 million, compared with a USD166 million deficit in May 2025. Meanwhile, the deficit on primary income narrowed to USD7.648 billion during the first eleven months of the fiscal year from USD8.047 billion in the same period of FY25. Secondary income posted a surplus of USD40.111 billion, up from USD36.671 billion a year earlier.
Exports and imports both increased during May. Goods and services exports reached USD3.21 billion, slightly higher than the USD3.17 billion recorded in May 2025, while imports rose to USD6.49 billion from USD6.39 billion over the same period. Analysts cited the record remittance inflows, together with modest export growth, as the principal factors behind the monthly surplus.
According to the central bank, the sizeable inflow of remittances helped keep the current account deficit within the lower end of its earlier projected range for the fiscal year despite a challenging external environment. Increased official inflows also supported the country's financing needs, enabling continued foreign exchange purchases and strengthening reserves, which the SBP expects to reach USD18 billion by the end of June 2026. The central bank has projected that the current account for FY26 will remain within a range of zero to one percent of GDP.
The latest external sector performance coincides with the federal government's Annual Plan for 2026-27, which sets a target of four percent GDP growth and envisages a national development programme worth Rs3.675 trillion. The plan projects a current account surplus of USD3.8 billion, equivalent to 0.7 percent of GDP, while forecasting stronger exports, remittances and investment during the next fiscal year.
Under the Annual Plan, goods exports are targeted at USD32.9 billion and services exports at USD11.3 billion. Goods imports are projected at USD70 billion and services imports at USD13.8 billion, while workers' remittances are expected to rise further to USD42.4 billion in FY27. Total investment is targeted at 15 percent of GDP, with national savings projected at 14.3 percent of GDP.
The government has also proposed a national development outlay of Rs3.675 trillion, comprising a Rs1 trillion Federal Public Sector Development Programme, Rs2.224 trillion in provincial Annual Development Programmes and Rs451 billion in investments by state-owned enterprises. Infrastructure and connectivity projects feature prominently, including allocations for the N-25 Quetta-Karachi Highway, Sukkur-Hyderabad Motorway, Pakistan Railways Main Line-1 and major hydropower projects such as Mohmand, Dasu and Diamer-Bhasha dams. Additional allocations include education, youth initiatives, information technology parks, climate resilience projects and Karachi's K-IV water supply scheme.
Analysts quoted in the articles argue that a stronger external account could help rebuild foreign exchange reserves, strengthen investor confidence and support longer-term economic growth. They nevertheless note that the country's cumulative current account surplus remains significantly below last year's level, underscoring the continued reliance on remittance inflows to offset persistent trade deficits while the government pursues more ambitious external sector objectives in FY27.