FPCCI Unhappy With SBP After Monetary Policy Announcement

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed dissatisfaction with the State Bank of Pakistan's (SBP) decision to keep the key policy rate at 11.5 percent, arguing that businesses and industries require relief from elevated borrowing expenses during a period of economic stagnation. Atif Ikram Sheikh, the FPCCI president, deemed the decision as contractionary and counterproductive, warning that maintaining a high interest rate would continue to curtail economic activity and hinder efforts to revitalize industry.

He contended that monetary policy constituted one of the few effective means to offer immediate assistance to businesses, yet the opportunity had not been capitalized upon. Sheikh contended that the central bank's measured approach did not mirror current economic conditions, highlighting that the trade deficit had expanded by 18.1 percent in July and August 2026 compared to the same period a year earlier.

He further noted that the industrial sector was grappling with an existential crisis owing to soaring energy tariffs, increasing petroleum prices, geopolitical uncertainty, and high financing costs, all of which were contributing to stagnation in industrial activity nationwide. The FPCCI president elucidated that manufacturing sectors were experiencing severely restricted growth because businesses were unable to secure the working capital necessary to sustain operations.

The difficulty in accessing financing had exacerbated the situation, he added. Sheikh cautioned that high borrowing costs would persistently diminish private sector credit utilization, leaving small and medium-sized enterprises along with large-scale manufacturers with limited access to formal financing and insufficient operational liquidity.

He asserted that the high cost of capital was also exacerbating the decline in exports as manufacturers were unable to maintain competitive production costs in international markets. Pakistani exporters were forfeiting market share to regional competitors that benefited from more readily available financing and single-digit interest rates, he added.

Sheikh contended that the high cost of export refinancing was making Pakistani products less competitive, leading to the loss of export orders and reduced foreign exchange earnings. He cautioned that national export growth and economic recovery targets would remain elusive under the current monetary and fiscal policies. He urged the State Bank of Pakistan to reconsider its stance and implement immediate measures to support business continuity and industrial recovery.