The Pakistan Bank Association(PBA) on Wednesday announced a voluntary reduction of 3 percentage points in the markup rate on the Export Refinance Facility (ERF), lowering the end-user financing cost for exporters to 4.50 percent with immediate effect.
PBA said in a statement that the move was taken “in national interest” to “materially promote economic progress by lowering financing costs for exporters and strengthening foreign exchange inflows.”
The revision applies to all new ERF loans and rollovers, bringing the effective export financing rate down to 4.50 percent for eligible businesses. The initiative operates under the current ERF limit of Rs1,052 billion, though capacity may be expanded if the State Bank of Pakistan (SBP) or EXIM Bank increases the limit through June 2027.
PBA highlighted that banks are actively deploying liquidity to support economic recovery. In its statement, the association noted that private sector credit grew by Rs1.1 trillion in FY25, compared with Rs470 billion in the previous year, demonstrating strong increases in both working capital and investment loans. The SME borrower base saw a 57 percent surge, and the agriculture sector’s borrower base expanded from 2.7 million to nearly 3 million, with record disbursements of Rs2.58 trillion.
PBA Chairman Zafar Masud said: “We recognise that export growth is critical for Pakistan’s economic stability. By providing capital at a highly competitive 4.50 percent, the sector is proving that it stands firmly behind the state and our exporters.”
The statement also framed the rate cut as part of a series of strategic interventions by the banking industry to help stabilise the economy, including efforts to reduce circular debt and facilitate the privatisation of Pakistan International Airlines (PIA).
Exporters and industry stakeholders are expected to benefit from the lower cost of credit, which could improve price competitiveness in global markets and support foreign exchange earnings.
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