KARACHI: The current account posted a surplus of $459 million in May, pushing the cumulative balance for the first 11 months of the current fiscal year back into surplus.

State Bank of Pakistan (SBP) data released on Wednesday showed that the surplus in May, compared with a deficit of $276m in April, has raised hopes that the government could close the fiscal year with either a surplus or only a marginal deficit. The previous fiscal year ended with a surplus of $1.8 billion.

The data showed that the current account recorded a surplus of $255m during July-May FY26, compared with a surplus of $1.618bn in the corresponding period of FY25. The government has set a current account deficit target of $3.6bn (around 0.7pc of GDP) for FY27, compared with a revised deficit target of about $1.1bn for FY26. A possible surplus in FY26 would be encouraging for economic stability and would help support exchange rate strength.

Financial sector analysts attributed the May current account surplus largely to exceptionally strong remittance inflows. The country received $4.2bn in remittances during May, prompting the government to raise its remittance target for FY27.

Foreign investment declines by 28pc in 11MFY26

The government is targeting remittance inflows of $42.4bn in FY27 to help offset the widening trade deficit and bolster foreign exchange reserves. The trade gap reached $35bn during July-May FY26, absorbing a significant portion of remittances sent by overseas Pakistanis. Successive governments have relied on remittance inflows for decades, and these now exceed the country’s total exports by more than 25pc.

Foreign investment plunges

Despite improvements on the external front, foreign direct investment (FDI) continued to decline during the current fiscal year. Pakistan remains among the lowest recipients of foreign investment in the region.

SBP data released on Wednesday showed that FDI fell by 28.4pc during July-May FY26 compared with the same period last year. The country received $1.623bn in FDI during the first 11 months of FY26, down from $2.267bn in the corresponding period of FY25.

The government established the Special Investment Facilitation Council (SIFC) to attract foreign investment, while the Board of Investment has long been tasked with the same objective. However, neither has succeeded in generating a significant increase in inflows this year. China remained the largest investor, contributing $819m of the total $1.623bn received during July-May FY26, underscoring the limited participation of other countries. Hong Kong was the second-largest source of investment, with inflows of $308.4m. The UAE, the UK and Switzerland invested $219m, $113m and $187m, respectively, during the period.

The highest inflows were recorded in electricity, gas, steam and air-conditioning supply, which attracted $1.081bn, while financial and insurance activities received $808m during the period.

Published in Dawn, June 18th, 2026