Remittance Boost Fuels Temporary Current Account Surplus in Pakistan

KARACHI: Pakistan has achieved a historic current account surplus of $2.1 billion for the fiscal year 2025, driven by a surge in remittances from overseas Pakistanis, according to Mian Zahid Hussain, a prominent business leader. While the development marks a significant achievement, Hussain cautioned that this improvement is temporary and should not be mistaken for sustainable economic stability.

Addressing the business community, Hussain, who holds multiple leadership roles in business organizations, praised the Prime Minister and Finance Minister for the surplus, which was the first in 14 years. However, he stressed that the influx of remittances, which has boosted foreign exchange reserves to $14.5 billion, cannot replace necessary economic reforms or the enhancement of productive capacity.

Hussain highlighted the pressing need to convert the $29 billion trade deficit into a surplus. He pointed out that Pakistan’s export levels, stagnating at $32 billion, place the country among the weakest in terms of global competitiveness. While the current account deficit has decreased due to discouraged imports, this policy has negatively impacted local industries reliant on imported raw materials and components, leading to reduced production and increased unemployment.

In outlining the economic challenges, Hussain criticized the reliance on loan rollovers from China, Saudi Arabia, and the UAE, as well as import controls, as unstable strategies. He urged the government to focus on enhancing productive capacity, diversifying exports, and attracting investment as part of a long-term solution for sustainable economic growth.

Despite being under an International Monetary Fund program that has improved Pakistan’s global standing, significant foreign investment remains absent from the domestic economy. Hussain emphasized that increasing exports and competitiveness is essential for genuine economic progress, warning that without export expansion, the current account surplus does not represent true economic advancement.

Hussain concluded by stressing that the recent surplus comes at a critical time for Pakistan, as the country seeks to balance external debt obligations and strive for fiscal stability. He reiterated that addressing root economic causes and implementing long-term measures is vital for long-term prosperity, cautioning against reliance on temporary measures that could obscure deeper economic vulnerabilities.