The figures on the balance of payments for Pakistan for the first quarter of 2025-26 have been released recently by the SBP (State Bank of Pakistan).

The numbers are somewhat contrary to the perception that there is a high degree of stabilization in external transactions of Pakistan.

The previous year, 2024-25, had, in fact, witnessed a positive balance in the current account after a long time. This had contributed to a big build-up of foreign exchange reserves of USD 5.1 billion to a relatively high level of USD 14.6 billion. This was enough to provide import cover for 2.5 months.

A comparison of the outcome in the balance of payments in the first quarter of 2025-26 with that in the corresponding quarter of 2024-25 and with the previous quarter of April to June 2024-25 reveals a somewhat different picture.

The first indicator used for the comparison between quarters is the size of the balance in the current account. It has turned negative to USD 594 million in July to September 2025 as compared to a surplus of USD 177 million in the previous quarter.

Further, while there was also a deficit in the first quarter of 2024-25, it was over 18 percent lower than the deficit in the corresponding quarter of 2025-26.

The bottom-line comparison is with the change in the position of the level of foreign exchange reserves. They have actually fallen by USD 274 million in the first quarter of 2025-26.

There was a significant increase in foreign exchange reserves of USD 1,236 million in the........

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