Lawmakers during a meeting of the Senate Standing Committee on Commerce on Monday expressed hope that the State Bank of Pakistan’s policy rate could be brought down to single digits by June 2026, saying elevated interest rates have severely constrained business activity and access to financing.
The committee was briefed by Federal Minister for Commerce Jam Kamal Khan. He said nearly 95 percent of Pakistan’s business class lacks access to formal financing, while high interest rates have encouraged investors to park funds in banks rather than invest in productive sectors. He noted that returns of around 18.1 percent remain attractive which hurts private investment.
The minister told the committee that the government’s policy space remains limited under the International Monetary Fund (IMF) program, which requires equal treatment of all sectors and discourages sector-specific incentives. He said the IMF has also raised objections to special economic zones and allows subsidies only when they are linked to higher revenues.
Jam Kamal Khan stressed to promote small and medium enterprises (SMEs), noting that Pakistan’s export industries rely heavily on imported raw materials. He said recent relief measures and the prime minister’s announcements were aimed at supporting exports and easing pressure on industry. He added that the infrastructure cess was likely to be reduced or abolished, with discussions already held with provincial governments. The committee also recommended providing relief in income tax rates.
The meeting was informed that Pakistan’s bilateral trade with Iran currently stands at $3.12 billion, including imports worth $2.42 billion and exports exceeding $700 million. Committee members expressed strong dissatisfaction over the non-implementation of a Statutory Regulatory Order (SRO) on trade facilitation with Iran, alleging that the Federal Board of Revenue (FBR) was creating hurdles.
Senator Saleem Mandviwala said the SRO was issued after a year of effort but remains stalled due to resistance from the FBR. Committee members demanded that FBR Chairman Rashid Mahmood Langrial be summoned to explain the delays, warning that excessive enforcement could further damage industry and business activity.
Officials from the Ministry of Commerce said memorandums of understanding worth $100 million were signed during the recent Pakistan-Iran Business Forum in Tehran. They added that while petroleum trade with Iran remains banned, trade in several other products, including rice and quinoa, has increased, though the lack of formal banking channels continues to pose a major challenge.