Pakistan has taken significant steps to bolster economic activity and support businesses with a series of financial and energy-related reforms. On January 30, 2026, Prime Minister Shahbaz Sharif announced a reduction in the refinance rate by 300 basis points, lowering it from 7.5% to 4.5%. This move aims to ease financing costs for businesses, stimulate investment, and enhance liquidity in the market.
In tandem with the refinance rate cut, the government also unveiled reductions in electricity tariffs for industrial and commercial consumers. The wheeling charges for power transmission have been lowered by Rs4.04 per unit, bringing the rate down to Rs8.51 per unit from the previous Rs12.55 per unit. Industries will further benefit from a Rs4.04 per kWh reduction in power tariffs, combined with a Rs9.0 per kWh cut in wheeling charges. These measures are expected to significantly lower operational costs for businesses, enhancing competitiveness and supporting the broader industrial sector amid ongoing economic stabilization efforts.
The financing rate for the Export Refinance Scheme (ERF) has also been revised. The new rate is calculated as the Policy Rate of 10.5% minus 6%, a notable decrease from the previous Policy Rate minus 3%. This adjustment is designed to provide additional support to exporters, facilitating investment activity and improving the country’s export competitiveness.
The Prime Minister’s announcement was made during a ceremony honoring Pakistan’s leading exporters and prominent business figures. During the event, awards were presented to top-performing exporters in recognition of their contribution to the national economy, along with the issuance of blue passports as part of the honor.
Business leaders have welcomed the initiative as a timely and strategic intervention. Musadaq Zulqarnain, Chairman of Interloop Limited, described the reforms as “thoughtful and timely,” noting that the reduction in ERF rates was achieved without any additional fiscal burden on the government. He highlighted that the reforms were made possible through a prudent 1% cut in the Cash Reserve Requirement (CRR), which has released over Rs300 billion in liquidity into the banking system. This liquidity enables banks to absorb the 300 basis points reduction in ERF rates, strengthening market liquidity while maintaining financial sector profitability.
Market analysts are closely monitoring the impact of these measures, particularly on investment activity, energy costs, and the broader macroeconomic landscape. The combined effect of lower financing rates and reduced industrial power tariffs is expected to improve business sentiment, incentivize investment, and drive economic growth, while supporting export-oriented industries in maintaining competitive pricing in international markets.
As Pakistan navigates ongoing economic challenges, these reforms signal a commitment to creating a more business-friendly environment. By targeting both financial and operational costs, the government aims to provide immediate relief to industries and exporters while laying the groundwork for sustainable economic stability.
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