The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has criticized the State Bank of Pakistan’s (SBP) decision to maintain the key policy rate at 11.5 percent, saying businesses and industries need relief from high borrowing costs amid economic stagnation.
Atif Ikram Sheikh, president of the FPCCI, described the decision as contractionary and counterproductive, warning that keeping the benchmark interest rate at a high level would continue to restrict economic activity and undermine efforts to revive industry.
He said monetary policy was one of the few effective tools available to provide immediate support to businesses, but the opportunity had not been utilized. The business community had demanded that the policy rate be reduced to single digits to lower the cost of doing business, he added.
Sheikh said the central bank’s cautious approach did not reflect current economic conditions, noting that the trade deficit had increased by 18.1 percent in July and August 2026 compared with the same period a year earlier.
He said the industrial sector was facing an existential crisis due to high energy tariffs, rising petroleum prices, geoeconomic uncertainty and elevated financing costs. These pressures were contributing to stagnation in industrial activity across the country.
The FPCCI president said manufacturing sectors were experiencing severely limited growth because businesses were unable to secure the working capital needed to maintain operations. Difficult access to financing had further intensified the problem, he added.
Sheikh warned that high borrowing costs would continue to reduce private sector credit uptake, leaving small and medium sized enterprises as well as large scale manufacturers with limited access to formal financing and insufficient operational liquidity.
He said the high cost of capital was also contributing to declining exports because manufacturers were unable to keep production costs competitive in international markets. Pakistani exporters were losing market share to regional competitors that benefited from more accessible financing and single digit interest rates, he added.
Sheikh said the high cost of export refinancing was making Pakistani products less competitive, resulting in the loss of export orders and lower foreign exchange earnings. He warned that national export growth and economic recovery targets would remain difficult to achieve under the prevailing monetary and fiscal policies.
He urged the State Bank of Pakistan to reconsider its position and introduce immediate measures to support business continuity and industrial recovery.
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