KARACHI/ISLAMABAD: Pakistan’s current account deficit narrowed sharply in August on both a monthly and yearly basis, State Bank of Pakistan (SBP) data show, helped by strong remittances. However, the central bank’s figures also point to a worrying rise in capital outflows linked to foreign direct investment. Separately, the Federal Board of Revenue (FBR) has allowed citizens to pay sales tax on mobile phones brought from abroad in instalments.
According to the SBP, the current account deficit fell to $98 million in August 2026. That compares with $324 million in August last year and $445 million in July 2026.
For the first two months of the current fiscal year, the cumulative deficit stood at $543 million, against $853 million in July and August of the previous fiscal year, a decline of about 36 percent.
SBP data show exports of goods and services rose by more than 5 percent year-on-year to $3.33 billion in August, while imports grew by over 8 percent to $6.64 billion. Workers’ remittances made the biggest difference, rising nearly 17 percent to $3.66 billion.
The improvement is significant given the external pressure from high global oil prices linked to the Middle East conflict. The SBP, which kept its policy rate unchanged at 11.5 percent on September 14, has said its foreign exchange reserves reached $21.4 billion, supported by inflows including Eurobond proceeds.
The picture on investment is less encouraging. According to the SBP, no net new direct investment came in during the first two months of the current fiscal year. Instead, there was an outflow of $491 million in July and August.
In August 2026 alone, $311 million left the country, compared with $160 million in August last year, nearly double. In July 2026, the outflow was $180 million. During July and August of the previous fiscal year, $355 million was withdrawn, according to the SBP.
The trend follows a weaker year for investment. Net FDI fell 34 percent to $1.6 billion in FY26, down from $2.48 billion in FY25, according to SBP data reported earlier.
A narrower current account deficit reduces immediate pressure on the rupee and reserves. But relying mainly on remittances rather than export growth or investment leaves the economy exposed if global conditions worsen. Economists have long argued that sustainable external stability needs stronger export growth and steady foreign investment, both of which depend on policy consistency and investor confidence.
In a relief for travellers, the FBR has approved payment of sales tax in instalments on mobile phones brought into Pakistan from abroad for personal use.
According to an FBR circular, the facility has been introduced through an amendment to the Ninth Schedule of the Sales Tax Act, 1990. Under the new mechanism, citizens can pay the sales tax in instalments instead of a lump sum, but the full amount must be cleared before the end of the relevant fiscal year.
The FBR said the facility will be enabled through the Pakistan Telecommunication Authority’s (PTA) Device Identification, Registration and Blocking System (DIRBS). The move comes two months after the PTA announced a programme to allow phone taxes to be paid in instalments.
In July 2019, the government ended the facility that allowed travellers to bring a mobile phone into the country free of tax. Since then, duties and taxes have had to be paid upfront before an imported phone could work on local networks.
The upfront cost, often a large share of a phone’s price, has been a major burden. Spreading payments over the fiscal year could encourage more people to register phones legally rather than keep them unregistered.
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