The current account deficit (CAD) in Pakistan has experienced a dramatic surge of over 255 percent during the first four months of the fiscal year 2026, rising sharply from the previous year’s figures. This significant increase is primarily rooted in soaring imports coupled with stagnant exports, raising concerns about the country's overall economic stability. But here’s where it gets controversial—the reasons behind this situation involve government policies, international pressure, and what some experts see as deliberate economic slowing.
According to the latest data released by the State Bank of Pakistan on Monday, the country recorded a CAD of $733 million between July and October, compared to just $206 million in the same period last year. Notably, October alone posted a deficit of $112 million, contrasting with a surplus of $83 million in September, indicating ongoing pressure on the current account.
This widening deficit is closely linked to increased import activity, while at the same time, exports haven't shown any meaningful growth during this period. To comply with International Monetary Fund (IMF) conditions, the government loosened import restrictions, which arguably contributed to the rising import bill.
Over the past three years, there has been widespread criticism of the government's failure to stimulate economic growth, with many believing that the slowdown was intentionally maintained to keep the current account deficit under control. For instance, while Pakistan posted a surplus of $1.9 billion during FY25, its real economic growth was limited to around 2.6 percent, later revised upward to 3 percent—figures that some argue are artificially subdued.
Experts have been urging policymakers to relax import restrictions to foster growth, given Pakistan’s reliance on an import-led economic model. Data shows that the value of goods and services imported in the first four months of this fiscal year jumped to approximately $24.9 billion, from $22.6 billion a year earlier. Meanwhile, exports remained relatively flat, totaling around $13.7 billion compared to $13 billion last year, resulting in a growing trade deficit of about $11.3 billion—up from $9.6 billion in the same period last year.
Despite the rising current account deficit, other external financial indicators remain supportive for Pakistan. For instance, remittance inflows in October increased to $3.4 billion from $3.2 billion in September, and overall remittance volume for the period has been higher than analysts initially expected. The government is optimistic about reaching $40 billion in remittances for FY26.
Furthermore, the anticipation of a $1.2 billion inflow from the IMF as part of the Extended Fund Facility (EFF) and Resilience and Sustainability Facility (RSF), along with support from the United States for potential investment, has somewhat improved market sentiment regarding Pakistan’s economy. Some analysts also believe that recent defense agreements with Saudi Arabia could boost remittance flows further.
An expert in the field emphasized that the current account balance is crucial for maintaining external stability and building foreign exchange reserves, which in turn help stabilize the Pakistani rupee. However, the expert warned that if the deficit persists through the first half of FY26, it could have severe negative consequences for the country’s economic health and currency stability.
So, the question remains: Is the current strategy of tolerating a large deficit justified as a temporary necessity, or does it risk undermining Pakistan's economic future? What are your thoughts—should the government prioritize growth at any cost, or focus on correcting the deficit— and why? Share your points of view in the comments.
