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Lawmakers expressed optimism on Monday that the State Bank of Pakistan (SBP) could reduce its policy rate to single digits by June 2026, aiming to boost business activity and investment. During the Senate Standing Committee on Commerce meeting, Federal Minister for Commerce Jam Kamal Khan highlighted how high interest rates, currently at 18.1%, have limited access to formal financing for nearly 95% of the country’s business class, discouraging productive investment.
Pakistan’s elevated interest rates have long been a barrier for small and medium enterprises (SMEs) and export-oriented industries. The government’s limited policy space under the International Monetary Fund (IMF) program restricts sector-specific incentives, allowing subsidies only when linked to higher revenues. Relief measures announced by the prime minister, including potential reduction or removal of the infrastructure cess, aim to ease pressure on industry and support exports.
The committee also reviewed Pakistan’s trade with Iran, currently valued at $3.12 billion, with imports at $2.42 billion and exports surpassing $700 million. Senators criticized the Federal Board of Revenue (FBR) for delaying the implementation of a Statutory Regulatory Order (SRO) on trade facilitation, which was issued after a year of effort. Senator Saleem Mandviwala warned that over-enforcement could further harm industrial growth.
Officials highlighted that $100 million worth of memorandums of understanding were signed during the Pakistan-Iran Business Forum in Tehran. While petroleum trade remains banned, exports of rice, quinoa, and other products have increased, though challenges persist due to the lack of formal banking channels.
Jam Kamal Khan stressed the importance of promoting SMEs to stimulate Pakistan’s export industries, which rely heavily on imported raw materials. Recent relief measures and fiscal adjustments aim to make financing more accessible, enhance competitiveness, and encourage private sector investment.
