Lawmakers attending a meeting of the Senate Standing Committee on Commerce have expressed optimism that the State Bank of Pakistan’s policy rate could be reduced to single digits by June 2026, saying persistently high interest rates have sharply restricted business activity and limited access to financing across the country. Members of the committee noted that elevated borrowing costs have discouraged private investment and slowed economic momentum.
During the briefing, Federal Minister for Commerce Jam Kamal Khan told the committee that nearly 95 percent of Pakistan’s business community remains outside the formal financing system. He explained that high policy rates have incentivized investors to keep their money in banks, where returns of around 18.1 percent remain attractive, instead of investing in productive sectors of the economy. This trend, he said, has significantly hurt private sector growth.
The minister said the government’s policy options are constrained under the ongoing International Monetary Fund program, which requires uniform treatment across sectors and discourages sector-specific incentives. He added that the IMF has raised objections to special economic zones and allows subsidies only when they are directly linked to higher revenues, limiting the government’s ability to provide targeted relief.
Jam Kamal Khan emphasized the need to promote small and medium enterprises, noting that Pakistan’s export-oriented industries are heavily dependent on imported raw materials. He said recent relief measures and announcements by the prime minister were aimed at supporting exports and easing financial pressure on industry. He also informed the committee that discussions with provincial governments were underway to reduce or abolish the infrastructure cess, while members recommended relief in income tax rates to support businesses.
The committee was also briefed on Pakistan’s bilateral trade with Iran, which currently stands at 3.12 billion dollars, including imports worth 2.42 billion dollars and exports exceeding 700 million dollars. Committee members expressed serious concern over the non-implementation of a Statutory Regulatory Order related to trade facilitation with Iran, alleging that the Federal Board of Revenue was creating unnecessary obstacles.
Senator Saleem Mandviwala said the SRO had been issued after a year of effort but remained stalled due to resistance from the FBR. Lawmakers demanded that FBR Chairman Rashid Mahmood Langrial be summoned to explain the delays, warning that excessive enforcement and procedural hurdles could further harm industry and business activity.
Officials from the Ministry of Commerce informed the committee that memorandums of understanding worth 100 million dollars were signed during the recent Pakistan-Iran Business Forum in Tehran. They added that while petroleum trade with Iran remains prohibited, trade in several other commodities, including rice and quinoa, has increased, although the absence of formal banking channels continues to be a major challenge for bilateral trade expansion.
