PHMA expresses concern over increase in policy rate
FAISALABAD: Mian Farrukh Iqbal, Chairman of the Pakistan Hosiery Manufacturers & Exporters Association (PHMA), North Zone, has expressed serious concern and strong reservations over the State Bank of Pakistan’s decision to increase the policy rate by 50 basis points to 12 percent, warning that the move will adversely affect Pakistan’s textile and hosiery export sector.
He stated that the increase in the policy rate at a time when exporters are already facing high production costs, expensive energy, rising operational expenses and intense international competition is highly disappointing. Instead of providing relief and facilitating export-led growth, the decision will further increase the cost of doing business and undermine the competitiveness of Pakistani exporters in international markets.
MianFarrukh Iqbal pointed out that Pakistan’s borrowing costs remain significantly higher than those of competing regional economies. Based on the regional policy rates cited by the industry, Pakistan’s rate stands at 12 percent, compared with 9.5 percent in Bangladesh, 8.75 percent in Sri Lanka and 5.5 percent in India. This substantial difference puts Pakistani exporters at a serious disadvantage, particularly in the textile and hosiery sectors, where international buyers demand competitive prices, quality products and timely deliveries.
He emphasized that the textile export industry requires affordable financing to purchase raw materials, maintain production, meet working-capital requirements, invest in technology and fulfil export orders. Higher interest rates increase financial and production costs, reduce profit margins, discourage new investment and make it increasingly difficult for exporters to compete with regional rivals.
The PHMA North Zone chairman further observed that Pakistan’s export sector is already under pressure from high electricity and gas tariffs, taxation, expensive borrowing, delayed refunds and other structural challenges. An increase in the policy rate will add to these difficulties, potentially discouraging industrial expansion, affecting employment and restricting the country’s export growth at a time when foreign exchange earnings are critically important.
He urged the State Bank of Pakistan and the federal government to adopt a coordinated, export-oriented economic policy that supports industrial growth instead of placing additional financial pressure on export-oriented industries.
“Pakistan needs competitive financing, affordable energy and a stable, predictable business environment to increase exports and attract investment. Our exporters cannot compete effectively in international markets if their financing and production costs remain substantially higher than those of competing countries,” he stated.
Mian Farrukh Iqbal called upon the State Bank of Pakistan to reconsider its monetary policy stance in light of the challenges faced by export-oriented industries and stressed the need for a gradual reduction in interest rates as economic conditions permit. He also urged the government to introduce dedicated, affordable financing facilities for textile and hosiery exporters to protect existing export orders, encourage new investment, generate employment and enhance foreign exchange earnings.
He concluded that sustainable economic growth, employment generation and the strengthening of Pakistan’s foreign exchange reserves depend heavily on a competitive export sector. Policies should therefore facilitate exporters through lower financing costs and a business-friendly environment rather than impose additional burdens that weaken their ability to compete globally.
Copyright Business Recorder, 2026