FPCCI Hails 3% ERF Cut, Promoting Export-led Growth in Pakistan

In Karachi, Pakistan, Mr. Atif Ikram Sheikh, President of the Federation of Pakistani Chambers of Commerce & Industry (FPCCI), hailed a crucial development in the country’s export-oriented economy as the banking sector announced its decision to cut the Export Refinance Facility (ERF) rate by 3%, significantly lowering it from an initial 7.5% to just 4.5%. This reduction, Mr. Sheikh emphasized, is not merely a nominal adjustment but represents a critical step in aligning Pakistan’s export-driven sectors with regional competitors like Bangladesh and Vietnam, whose financing costs are generally below single digits.

Mr. Atif Ikram Sheikh described the ERF rate cut as a timely lifeline for businesses dependent on exports, particularly those within the manufacturing sector. He highlighted that this reduction effectively addresses long-standing concerns about the cost of capital in Pakistan’s economy. The move also signals flexibility, with the existing Rs1,052 billion limit for the facility expected to remain in place until June 2027, potentially increasing if necessary under the oversight of State Bank of Pakistan (SBP) or Export-Import Bank of Pakistan (EXIM Bank).

Addressing the implications of this change, Mr. Sheikh noted that with an ERF rate now at 4.5%, Pakistani exporters stand to gain a significant competitive edge against their regional rivals. He further explained that this cost reduction would significantly impact small and medium enterprises (SMEs), which have seen a robust increase in borrowing over the past fiscal year—up by 57%. With a 4.5% ERF rate, these SME exporters can better manage financing costs and sustain growth.

Mr. Atif Ikram Sheikh underscored the importance of this cost-cutting measure, particularly at a time when the private sector is striving to support the government’s plans for robust economic recovery and export-led growth. He predicted that continued government support could accelerate industrial borrowing in line with SME activity trends.

The FPCCI President concluded by affirming the organization’s commitment to collaborating with the government towards achieving Pakistan’s ambitious exports target. He highlighted how this reduction of ERF rates serves as a critical foundation for financial stability into 2026 and beyond, signaling an optimistic outlook on the country’s economic trajectory.

Brig Iftikhar Opel, SI (M), Retd., Secretary General of FPCCI, underscored the significance of these developments, emphasizing that the reduced ERF rates would be a cornerstone in enhancing Pakistan’s economic stability.