The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has criticized the State Bank of Pakistan’s decision to maintain the key policy rate at 11.5%, arguing that businesses and industries require lower borrowing costs to support economic activity and overcome ongoing pressures.
FPCCI President Atif Ikram Sheikh described the decision as contractionary and counterproductive, saying that maintaining the benchmark interest rate at its current level could continue to restrict economic activity. He said the high cost of financing was adding to difficulties faced by businesses and was undermining efforts to revive industrial growth.
Sheikh said monetary policy remained one of the few tools available to provide relatively immediate support to the business community, but the opportunity to use it had not been taken. According to him, the business community had called for the policy rate to be reduced to single-digit levels to bring down the cost of doing business and improve access to financing.
The FPCCI president also raised concerns over Pakistan’s external trade position. He noted that the country’s trade deficit increased by 18.1% during July and August 2026 compared with the corresponding period a year earlier. He argued that the central bank’s cautious approach did not sufficiently reflect the challenges currently confronting businesses and the wider economy.
According to Sheikh, the industrial sector is facing severe pressure from multiple factors, including high energy tariffs, rising petroleum prices, geoeconomic uncertainty and elevated financing costs. These conditions, he said, were contributing to stagnation in industrial activity and making it increasingly difficult for businesses to maintain sustainable operations.
He further said manufacturing companies were experiencing limited growth because they were struggling to secure the working capital required for day-to-day operations. Difficult access to financing has compounded the problem, particularly for businesses that rely on bank credit to fund inventories, production and other operational requirements.
Sheikh warned that high borrowing costs could continue to discourage private-sector credit uptake. This would leave small and medium-sized enterprises as well as large-scale manufacturers with restricted access to formal financing and insufficient liquidity to support their operations.
The FPCCI president also linked elevated financing costs with declining export competitiveness. He said manufacturers were facing difficulties keeping production costs competitive in international markets, while exporters were losing market share to regional competitors that have access to more affordable financing and single-digit interest rates.
Sheikh said the high cost of export refinancing was making Pakistani products less competitive abroad. This situation, he added, was contributing to the loss of export orders and reducing potential foreign exchange earnings. He warned that Pakistan’s export growth and broader economic recovery targets would remain difficult to achieve if the prevailing monetary and fiscal conditions continued to place pressure on businesses. The FPCCI president urged the State Bank of Pakistan to reconsider its policy position and introduce measures aimed at supporting business continuity and industrial recovery. He maintained that lower financing costs would be important for improving private-sector investment, supporting manufacturing activity and strengthening Pakistan’s export position.
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