SBP rate move draws mill owners' fire
Pakistan’s textile exporters have condemned a fresh tightening by the State Bank of Pakistan (SBP), the country’s central bank, which lifted its policy rate by 50 basis points to 12%. The Pakistan Textile Exporters Association (PTEA) says the step will make already expensive credit even harder to carry for mills facing steep energy bills and costly inputs.
Association leaders argue that local factories must now contest global orders against producers in India, Vietnam and China who can borrow far more cheaply. They warn that the gap will widen once commercial banks add their own spreads on top of the new benchmark.
What PTEA leaders told members
PTEA Chairman Rehan Naseem Bharara said higher policy rates would inflate the price of day-to-day working capital, cool plant investment and erode Pakistani sellers’ standing in overseas markets. He stressed that the headline 12% figure understates what firms actually pay after lenders’ margins.
Bharara compared regional financing: Indian industrial term credit, he said, sits near 9.25–9.6% a year, with machinery and SME facilities ranging from about 8.5% to 12.5%. Vietnamese SMEs in support industries, he added, can access funds at roughly 8–10%. China’s average general business lending rate, he said, is about 3.04%, while technology-upgrade loans near 2.7% can drop to an effective 0.85% once state interest support is applied.
Pakistani exporters, he argued, are thus racing against firms that enjoy much cheaper capital. He urged joined-up measures to cut production costs and back growth driven by foreign sales.
Cash flow, freight and SMEs
PTEA Vice Chairman Haris Yousaf said mills were already hard-pressed to fund routine operations, buy inputs and meet other outlays. A dearer interest environment, he cautioned, would intensify that squeeze and could undercut official plans that rely on export expansion.
He also warned that a lasting slide in exports might dampen overall growth, shrink money available for development budgets and make it harder for the country to service foreign debt. Freight charges, he added, have jumped by almost 200%.
Yousaf noted that small and medium firms account for roughly 45% of national output and need smoother financing if they are to grow. Costlier loans, he said, risk chilling investment and further squeezing activity. PTEA called for policy that treats the textile chain as one linked industry rather than taxing its stages in isolation.
Aasan alfaaz mein
State Bank ne policy rate 12% kar diya hai, yani bank se qarz mehnga ho gaya. Textile exporters ka kehna hai ke energy aur maal pehle se mehnga hai, ab sood aur bhi bhari padega. Woh kehte hain India, Vietnam aur China mein qarz sasta milta hai, is liye un se muqabla mushkil ho raha hai. Ordinary logon ke liye seedha matlab yeh hai ke agar factories kam export karen to jobs aur dollar kam aa sakte hain.
