ISLAMABAD – Pakistan’s current account deficit surged 256 per cent in the first four months of FY26, but the government expressed cautious optimism over the country’s economic outlook, citing steady export growth, remittances, and structural reforms.
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The Ministry of Finance (MoF) reported that stubborn inflation remains in the 5–6 per cent range, mainly due to pressure on food prices and agriculture production.
The ministry’s November economic update showed industrial activity continuing to strengthen amid ongoing reforms, while major fiscal indicators — including FBR collections, non-tax revenue, budget surplus, and primary surplus — declined slightly as a percentage of GDP. The tax-to-GDP ratio fell to 2.96 per cent compared to 3 per cent last year, and non-tax revenues dropped to 2.32 per cent from 2.63 per cent.
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Fiscal surplus stood at 1.63 per cent of GDP, slightly lower than 1.65 per cent last year, while the primary surplus was 2.7 per cent against 2.8 per cent. The report highlighted that higher remittances, an expanding Large-Scale Manufacturing (LSM) sector, and growth in IT exports are strengthening the economic outlook. Public debt fell by over Rs1.371 trillion, marking the first quarterly reduction in over five years.
The agriculture sector showed a mixed trend. Sugarcane output rose slightly to 84.74 million tonnes, while cotton, rice, and maize production declined. Conversely, mung and chili output increased. Agricultural credit disbursement rose 18.6 per cent to Rs845.3 billion, and imports of machinery and implements grew 23.5 per cent.
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Trade data showed merchandise exports rose 2 per cent to $10.6 billion, while imports surged 9.6 per cent to $20.7 billion, leading to a $10.1 billion trade deficit. Remittances grew 9.3 per cent to $13 billion, with Saudi Arabia and UAE as the top contributors. Despite a 26 per cent decline in net FDI, the government expects positive momentum to continue, supported by fiscal discipline, digital transition, and governance improvements.