Pakistan’s banking sector on Wednesday announced a voluntary 3% reduction in the markup rate on the Export Refinance Facility (ERF), lowering the end-user cost for exporters to 4.50% with immediate effect.
The move, which was taken in national interest, aims to ease financing costs for the export sector and support foreign exchange inflows amid the country’s ongoing economic recovery efforts, Pakistan Banks Association (PBA), a representative body of Pakistan’s banking sector, said in a statement.
Effective immediately, this reduction brings the end-user rate for exporters under the ERF scheme down to 4.50% for all new loans and rollovers, it said.
The initiative is currently subject to the existing ERF limit of Rs1,052 billion, though this capacity is designed to be flexible and may increase as and when the State Bank of Pakistan (SBP) or EXIM Bank increases the limit through June 2027.
“This measure represents a vital public interest intervention, aimed at materially promoting economic progress by lowering financing costs for exporters and strengthening foreign exchange inflows,” PBA said.
Citing the latest industry data, the PBA highlighted that banks are actively deploying liquidity to support economic recovery.
“In FY25, private sector credit grew by Rs1.1 trillion, a massive increase compared to Rs470 billion in FY24, reflecting a strong uptick in both working capital and fixed investment loans. This growth is inclusive, with the sector achieving a 57% surge in the SME borrower base, and the amount extended to SMEs doubling in two years.
“Simultaneously, the agriculture sector saw a historic rebound, with the borrower base growing from 2.7 million to nearly 3 million—reversing a sliding trend since 2019—and disbursements reaching a record Rs2.58 trillion,” said PBA.
Whereas, private sector credit further expanded by Rs654 billion or 6.75% in the first half of FY26 (Jul-Dec).
PBA was of the view that this rate relief is the latest in a series of “strategic interventions” by the banking industry to stabilise the national economy, including playing critical roles in reducing circular debt and facilitating the privatisation of Pakistan International Airlines (PIA).
“This initiative is not just about numbers; it is about the Banking Sector answering the call of the nation,” said Zafar Masud, Chairman of PBA.
“We recognise that export growth is critical for Pakistan’s economic stability. By providing capital at a highly competitive 4.50%, the sector is proving that it stands firmly behind the state and our exporters.
The data speaks for itself: with a Rs654 billion expansion in private-sector credit and historic highs in Agricultural disbursements, we are ensuring that the wheels of the economy keep turning. From supporting the PIA privatisation to managing circular debt, the banking industry remains fully committed to driving Pakistan’s prosperity.“
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