Forex Reserves Under Pressure

The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed alarm over Pakistan's trade deficit expanding by 15.13 percent in the first quarter of FY2026-27, potentially threatening the nation's foreign exchange reserves. FPCCI President Atif Ikram Sheikh revealed that the deficit surged to $10.792 billion during July-September 2026 from $9.374 billion in the same period last year.

The disparity widened notably in September alone, reaching $3.55 billion, a 6.15 percent rise from $3.35 billion in September 2025. Sheikh pointed to the high cost of doing business in Pakistan as the primary cause of the widening gap, citing high interest rates, electricity capacity charges, and petroleum levies as key hindrances to industrial productivity and value addition.

He cautioned that persistent import reliance to satisfy domestic demand could further strain the national exchequer and pose balance of payments risks if structural remedies are not implemented. To aid the FY2026-27 export aspirations and avert industrial stagnation, FPCCI has urged the Ministry of Finance and State Bank of Pakistan to lower the policy rate to single digits, thereby offering manufacturers more affordable working capital.

Sheikh also advocated for the immediate adjustment of electricity and gas tariffs to align them with regional competitors and targeted relief on inland logistics costs to alleviate domestic supply chain expenses and enhance the appeal of Pakistani manufacturers.