Pakistan’s textile exporters have criticised the State Bank of Pakistan’s decision to raise the policy rate by 50 basis points to 12%, warning that higher borrowing costs will weaken the industry’s competitiveness in international markets. The Pakistan Textile Exporters Association (PTEA) said the increase would add to existing pressures from expensive energy, raw materials, and shipping costs.
PTEA Chairman Rehan Naseem Bharara said higher interest rates would increase working capital costs, discourage investment, and make it harder for local manufacturers to compete with exporters in India, Vietnam, and China. He noted that businesses in these countries have access to comparatively cheaper financing, with general business lending rates in China averaging 3.04%, while industrial and SME loans in India and Vietnam are also available at lower rates in several categories.
PTEA Vice Chairman Haris Yousaf said exporters were already struggling to finance daily operations and purchase raw materials. He warned that rising borrowing costs and shipping expenses, which have reportedly increased by nearly 200%, could undermine export growth and economic activity.
The association urged the government to introduce an export-focused policy framework, improve access to financing for small and medium-sized enterprises, and reduce production costs across the textile value chain.
