KARACHI: Amidst a global environment riddled with uncertainty and turbulence, Pakistan is quietly but determinedly scripting a story of economic recalibration and renewal. Under the leadership of Prime Minister Mian Muhammad Shehbaz Sharif, the country has made undeniable strides towards macroeconomic stability. With foreign exchange reserves swelling, current account turning to surplus, and multilateral partners like the IMF and World Bank reaffirming their support, Pakistan’s economy appears to be inching steadily towards a trajectory of sustainable growth and investor confidence.
The first ten months of fiscal year 2024-25 have delivered a rare but welcome dose of optimism. According to the State Bank of Pakistan (SBP), the nation’s external current account balance recorded a surplus of $1.88 billion between July and April – an impressive turnaround from a $1.34 billion deficit during the same period last year. The month of April 2025 alone posted a surplus of $12 million, further building on March’s outstanding $1.20 billion surplus and April 2024’s $315 million figure. In an economy often haunted by deficits and slippages, this persistent positive trend signals not just course correction, but the maturation of prudent fiscal discipline.
While the trade deficit in goods remains a challenge – recorded at $21.343 billion in the first ten months of FY25 versus $17.975 billion during the same period last year-the gap is being offset by robust remittance inflows and improved service account management. Pakistan’s trade in services reported a marginally higher deficit of $2.497 billion, but this was substantially contained in the month of April 2025, where the deficit dropped to $188 million from March’s $217 million.
The overall trade deficit, when combining goods and services, stood at $23.84 billion during the July-April period, up from $20.377 billion in the corresponding months of FY24. Yet, this figure is cushioned significantly by inflows in the secondary income account and an astonishing surge in workers’ remittances.
Indeed, the true stabilising force in this narrative is the inflow of workers’ remittances – an enduring pillar of Pakistan’s external financing. For FY25 thus far, remittances have reached $31.21 billion, up from $23.851 billion during the first ten months of the previous year. This surge not only bridges Pakistan’s financial requirements but also serves as an emblem of global diaspora trust in Pakistan’s economic stewardship.
The balance on secondary income now reflects $32.847 billion in inflows – another resounding endorsement of growing confidence in Pakistan’s economic policies. These inflows are particularly significant when seen in light of the primary income deficit, which expanded to $7.127 billion. The larger inflows in remittances have helped offset this imbalance, strengthening the overall current account.
Meanwhile, the foreign exchange reserves have witnessed a steady and promising rise. As of May 9, 2025, Pakistan’s total liquid foreign currency reserves stood at $15.61 billion. Of this, the SBP held $10.40 billion, while commercial banks retained $5.21 billion. This increase is reflective of smart monetary management, better fiscal coordination, and external financial support.
Crucially, the SBP received the second tranche of SDR 760 million-equivalent to approximately $1.023 billion – from the International Monetary Fund (IMF) on May 13 under the Extended Fund Facility (EFF). This inflow is set to be reflected in reserves for the week ending May 16, further bolstering external buffers and cementing market confidence.
The IMF’s financial support is not just a liquidity infusion – it is a mark of institutional confidence in Pakistan’s reform agenda. The recent approval of the Resilience and Sustainability Facility (RSF) underlines the IMF’s belief in Pakistan’s medium-to-long-term economic viability. Combined with fiscal consolidation measures and public sector efficiency drives, these initiatives are reinvigorating Pakistan’s economic narrative on the international stage.
Additionally, Pakistan’s Roshan Digital Account (RDA) continues to play a pivotal role in remittance mobilisation and financial innovation. By April 2025, total RDA inflows reached $10.180 billion, up from $10.003 billion in March 2025. While the April inflow of $177 million reflects a dip from March’s $235 million, the overall upward trend remains solid. The RDA is emblematic of how digital finance is being leveraged to build economic resilience.
International institutions, too, are echoing confidence in Pakistan’s recovery trajectory. The United Nations’ World Economic Situation and Prospects 2025 report anticipates that Pakistan will register a GDP growth of 2.3% in 2025. While modest, this projection is vital for a nation emerging from a period of contraction. The report also highlighted Pakistan’s declining inflation and the central bank’s ability to initiate monetary easing – a sign of returning macroeconomic normalcy.
Further reinforcing this sentiment are the updated ratings and economic outlooks from global credit agencies. Pakistan’s adherence to the IMF’s structural reform agenda, successful execution of fiscal consolidation, and effective debt management strategies have contributed to improved market perception and reduced sovereign risk premiums.
Importantly, the broader regional context amplifies Pakistan’s performance. In a South Asia navigating post-Covid recovery and geopolitical flux, Pakistan stands out for its commitment to fiscal reforms and economic transparency. While challenges remain – notably in widening the tax base, curbing circular debt, and improving exports – the direction of travel is unmistakably positive.
Prime Minister Shehbaz Sharif’s government has made it a point to foreground economic diplomacy, prudent governance, and institution-building at the heart of its agenda. The results are beginning to show – not in grandiose declarations, but in the cold, hard numbers that reflect fiscal consolidation, investor confidence, and a genuine willingness to right the economic ship.
In essence, Pakistan is no longer just surviving – it is cautiously but confidently growing. The surplus in the current account, the rebound in remittances, the restoration of forex buffers, and the global endorsement from institutions like the IMF, World Bank, and the UN, all signal one thing: the country is moving in the right direction. For investors, economists, and citizens alike, there’s now a case to believe that the journey towards a resilient, self-sustaining Pakistan has finally begun.
