KARACHI: The Pakistan Banks Association (PBA) has welcomed the Federal Budget 2026-27, describing it as the first budget in years to shift the country’s focus from crisis management to sustainable economic growth while maintaining the fiscal discipline that underpinned Pakistan’s recent macroeconomic recovery.
The PBA expressed confidence that banks are well positioned to expand financing to the private sector, citing the budget’s commitment to fiscal consolidation, tax relief measures and incentives for exporters and the IT sector as key drivers of investment and economic growth.
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According to PBA, the Budget keeps faith with fiscal discipline, holding the deficit at 3.6 percent of GDP and a primary surplus of 2 percent, while extending real relief through lower personal income tax, a reduction in super tax for the wider corporate sector, support for exporters, and an extension of the concessional regime for IT and IT-enabled services to 2029.
Growth is targeted at 4 percent, with independent analysts seeing further upside as confidence returns. The Association sees this balance, caution on the fiscal accounts, ambition on growth, as exactly the right setting, and one in which private credit, rather than public borrowing, can do the heavy lifting.
Commenting on the Budget, Zafar Masud, Chairman PBA, said that this is a Budget the industry can build on.
“The conditions for priority-sector lending are the best in over a decade and we intend to use them for the benefit of our economy, our businesses, and our people”, he added.
Masud said that industry commitment is concrete: to drive SME financing from Rs 882 billion towards Rs 1.5 trillion by 2028, to revive mortgage & housing finance to achieve the 500,000 units target of the government by 2028, agriculture financing to cross Rs. 3.5 trillion disbursements during a year by 2028, promoting social impact projects, particularly in education and skill development, by leveraging the budgetary allocations to meet the international health and education funding commitment standard benchmark of 5 percent+ each, and to keep export credit flowing at competitive rates.
To make the most of this positive environment, we look forward to working with the Government and the State Bank of Pakistan on a consistent and predictable tax regime, documentation that reinforces financial inclusion, and risk-sharing that unlocks lending to priority sectors with both social as well as economic multipliers for sustainable growth, he added.
Measures in the Budget to revive property and housing, digital payments, exports and technology are expected to support a recovery in private credit. The breadth of recent progress underscores the point: workers’ remittances reached a record USD 38.3 billion, the Roshan Digital Account has channelled over USD 12 billion through formal channels, and the banking system now serves some 103 million depositors across nearly 268 million deposit accounts.
Muneer Kamal, CEO & Secretary General - PBA, said that this Budget is its shift from stabilisation towards growth, and the banking industry is ready to carry its share of that load.
“We will keep credit flowing to the productive sectors — housing, exports, technology and, above all, the SMEs that will drive the next phase of job creation. The foundations are strong, the outlook is encouraging, and the industry is fully committed to building on both”, he added.
Over the last two years the industry has delivered in an unparalleled fashion across SME, agriculture and housing and in low-cost housing the industry approved Rs 100 billion to some 67,000 beneficiaries in just two months, he informed.
The Association reaffirmed that, with these foundations in place, the industry stands fully behind the Government’s growth agenda as the recovery takes hold.
Accordingly to PBA, the banking industry has not waited to be asked. Over the past two years, it has repeatedly used its own balance sheet, at no cost to the exchequer and without sovereign guarantees, to unlock problems that had stalled the economy:
On Circular Debt, the industry coordinated the restructuring of Rs 1.225 trillion of power-sector circular debt at concessional rates, easing a burden that had choked the energy chain for years. It also restructured Rs 268 billion of PIA debt, clearing the way for the first major privatisation in two decades.
The industry also voluntarily reduced its margin on the Export Refinance Facility, bringing the cost of export financing down to 4.5 percent - acting ahead of the curve to keep exporters competitive.
Copyright Business Recorder, 2026
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