Reporting snapshot · 17 October 2026. The State Bank of Pakistan's latest balance-of-payments statement, released with the September figures on Friday 16 October, is preliminary and is typically revised once customs and banking data are reconciled. Two different measures of the quarterly goods gap are circulating: the central bank's balance-of-payments "goods" deficit and the customs-based merchandise deficit reported earlier this month. This article reports both rather than merging them.
What happened
Pakistan’s current account recorded a deficit of about $874 million in July–September, the first quarter of fiscal year 2026-27, according to the State Bank of Pakistan’s balance-of-payments data. That was wider than the $755 million deficit in the same quarter a year earlier, and it already exceeds the $391 million the current account ran for the whole of FY26, Dawn reported.
The deterioration accelerated in September. The current account swung to a deficit of $356 million from a surplus of $133 million in September 2025. On the broader balance of payments, September closed $4.39 billion in the red, against a $118 million deficit in August, and the first quarter showed a $3.12 billion overall deficit compared with a $274 million surplus a year earlier, according to The Express Tribune.
Why the gap widened
The immediate cause is trade. The central bank’s balance-of-payments figures put the quarterly goods deficit at $9.33 billion, up 21.1 per cent year on year, with goods imports rising 14.3 per cent to $17.78 billion and exports up 7.7 per cent to $8.45 billion. On the customs measure, the Pakistan Bureau of Statistics reported earlier this month that the merchandise deficit was $10.79 billion, up about 15 per cent. The two totals differ because the balance-of-payments and customs series are compiled on different bases, and neither is a revision of the other.
Dawn reported that the wider gap reflects higher international oil and gas prices as well as a rising food import bill. It put the quarterly merchandise deficit at $10.79 billion against $9.37 billion a year earlier, and noted that, after cotton, Pakistan has also been importing wheat, while edible-oil imports reached $3.357 billion in FY26.
Services did little to offset the goods gap. Services exports rose 22.8 per cent to $2.72 billion, led by telecommunications, computer and information services at $1.25 billion, but services imports also climbed to $3.55 billion, leaving a services deficit of $831 million — only slightly narrower than a year earlier.
Remittances remain the main support. Inflows reached $10.88 billion in the quarter, up 14 per cent, although the monthly pace eased to $3.59 billion in September from $3.66 billion in August, as KhabarWire reported on 10 October. Even so, the combined goods, services and primary-income balance deteriorated faster than remittances could fill it.
Investment and reserves
Foreign direct investment rose 20 per cent to $719.7 million in July–September from $600.4 million a year earlier, the data show, even as the monthly inflow slowed to $219.5 million in September. Canada was the largest source at $229 million, ahead of China at $197.5 million, with the United Kingdom at $83.4 million and the United Arab Emirates at $54.8 million.
Portfolio investment told a more volatile story. The quarter recorded a net portfolio inflow of about $2.93 billion against a net outflow of $631 million a year earlier, almost all of it in debt securities booked in September. Despite that, the financial account showed a net outflow of $4.16 billion, roughly $3.4 billion more than the year-earlier $726 million.
Gross foreign-exchange reserves, including cash holdings and excluding unsettled claims on the Reserve Bank of India, stood at $22.88 billion in September, up from $18.49 billion in August. The central bank’s reserve-assets measure rose $4.38 billion in the month even as the overall balance of payments recorded its $4.39 billion deficit — a reminder that reserves can move for reasons other than the current account.
Why it matters
The first-quarter gap is the clearest test yet of the government’s claim, repeated during the International Monetary Fund’s fourth review, that Pakistan’s external position has stabilised. The Fund’s staff-level agreement in early October described the current account as broadly balanced in FY26 and projected a contained deficit this year (see the IMF review story). A quarter that already exceeds FY26’s full-year current account deficit cuts against that reading, although the two are not directly comparable because the earlier year included months of sharper import compression.
The pressure is structural as well as cyclical. The Middle East conflict has kept oil above $100 a barrel and disrupted shipping through the Strait of Hormuz, raising the cost of the energy Pakistan buys. Softer European inflows and a stronger dollar have trimmed the remittance windfall that normally cushions the trade gap. A sustained current account deficit would test the reserve buffer the central bank has rebuilt and complicate the fiscal and external targets attached to the $7 billion Extended Fund Facility.
What is still uncertain
Several caveats apply. The central bank’s figures are preliminary, and the September balance-of-payments statement is normally revised once customs and banking data are reconciled. The two headline trade-deficit numbers — $9.33 billion on the balance-of-payments basis and $10.79 billion on the customs basis — cannot be compared directly, and this article reports both rather than choosing one.
It is also too early to say whether September marks a trend or a single bad month. The current account has been volatile all year, and the swing from surplus to deficit owes much to the base effect of an unusually strong September 2025. Whether the easing in remittances is a blip or the start of a slower run will not be clear until the October data. And the reserve gain does not by itself settle the question of external sustainability, because it reflects valuation and financing flows as well as trade.
Sources & reporting notes
This is a synthesis of published material and official statistics, not eyewitness reporting. The cited pages were reviewed on 17 October 2026. The headline current-account, trade, investment and reserve figures come from the State Bank of Pakistan's balance-of-payments statement; the independent reports by Dawn and The Express Tribune were used to confirm them and to supply the food and energy import detail. The figures are preliminary.
- State Bank of Pakistan — Balance of Payments (economic data)Accessed 17 October 2026 · Primary record: the central bank's balance-of-payments series underlying the September 2026 and July–September FY27 current-account, goods, services, income, financial-account and foreign-reserve figures.
- Dawn — "CAD swells to $874m in July-Sept"Published 17 October 2026 · Independent report of the SBP data: the $874m first-quarter current-account deficit, the $356m September deficit against a $133m surplus a year earlier, the comparison with FY26's $391m full-year deficit, and the food and energy import bill.
- The Express Tribune — "BoP swings to $4.39b deficit"Published 17 October 2026 · Independent report of the broader balance of payments: the $4.39bn September and $3.12bn quarterly deficits, the balance-of-payments goods deficit of $9.33bn, the services and portfolio detail, reserve levels and the rupee close.
