President of the Pakistan Businessmen and Intellectuals Forum (PBIF) and All Karachi Industrial Alliance, Chairman of the National Business Group Pakistan, Chairman of the FPCCI Policy Advisory Board, and former Provincial IT Minister, Mian Zahid Hussain, commenting on the State Bank of Pakistan’s monetary policy decision of October 26, has said that the 50-basis-point increase in the policy rate from 11.5 percent to 12 percent is a matter of concern for productive sectors. He said the decision would place further pressure on the financial costs of industries dependent on commercial borrowing, exporters and small businesses. Businesses were already facing rising electricity, raw-material and transportation costs. He acknowledged that the State Bank’s responsibility for price stability was important, but placing the entire burden of controlling inflation on interest rates could undermine productive recovery. Controlling inflation while keeping the industrial wheel moving should therefore remain a national economic priority.
Mian Zahid Hussain said annual inflation stood at 10.3 percent in September, while core inflation was approximately 8.4 percent. The State Bank aims to bring inflation within the medium-term range of 5–7 percent. He said price stability and the containment of inflationary expectations were essential; however, higher energy prices caused by the US–Iran war and disruptions in the domestic wheat supply were among the major factors behind current inflation. He said expensive credit could not, by itself, improve wheat availability, gas supplies or electricity affordability. If supply-side difficulties persisted, industries would have to bear both higher input costs and increased mark-up rates, weakening the pace of productive recovery.
Mian Zahid Hussain said Pakistan’s merchandise exports increased by 11.13 percent to $8.445 billion during July–September 2026, while imports rose by 13.20 percent to $19.213 billion, resulting in a quarterly trade deficit of $10.768 billion. The 18.49-percent year-on-year increase in exports during September was encouraging, but export growth remained below import growth. He said higher borrowing costs would further weaken exporters’ competitiveness. It was essential to strengthen exporters’ productive capacity, financial resources and international competitiveness so that the recent improvement could develop into sustainable export growth.
Mian Zahid Hussain said exporters receiving loans at fixed rates under the Export Refinance Scheme would not face a direct increase in mark-up on those particular loans as a result of the latest policy-rate increase. However, exporters without access to concessional financing, and businesses relying on commercial loans to meet financial requirements beyond their approved concessional limits, would face an additional financial burden. He said exporters paid for raw materials, salaries, electricity, shipments and insurance before receiving payments from foreign buyers. As a result, higher costs of interim commercial financing could reduce profit margins and weaken their ability to accept new orders. He urged the government to expand practical access to concessional financing, particularly for small and new exporters, and to release verified sales tax and income tax refunds without delay. This would reduce their excessive dependence on expensive commercial borrowing to keep their businesses operating.
Mian Zahid Hussain said small businesses were more vulnerable to costly financing because of their limited capital base. Rising borrowing costs could delay decisions concerning new machinery, production expansion, construction and recruitment. At the same time, higher interest expenses on new government borrowing and the repricing of existing debt could reduce fiscal space for development and social sectors. He said sustainable economic stability required not only lower inflation but also higher investment, production and decent employment.
Mian Zahid Hussain urged the government to immediately release verified sales tax and income tax refunds to meet the financing needs of businesses and improve access to export and SME financing. To strengthen export competitiveness, advance clarity and policy continuity should be ensured in industrial electricity and gas tariffs. He said timely wheat availability, effective storage and transportation, reduction in electricity theft and line losses, and control over unnecessary government expenditure were essential to contain inflation. The government, State Bank and FPCCI should maintain effective coordination and adopt policies that keep inflationary expectations under control while supporting the recovery of industry, exports and employment.