Federal Finance Minister Muhammad Aurangzeb has indicated that there is scope to reduce the interest rate, but any such decision rests solely with the State Bank of Pakistan (SBP). In its last meeting, the State Bank of Pakistan (SBP) maintained the key policy rate at 11%, citing inflationary risks and external uncertainties triggered by the Iran-Israel conflict.
The central bank had previously lowered the interest rate by 100 basis points (bps) to 11% on May 5. Overall, the central bank has cut the rate by 1,100 basis points since June from an all-time high of 22%.
Speaking to journalists in Karachi today, Aurangzeb stated that Pakistan’s economy is now moving towards stability due to the removal of structural barriers. “The government’s steps have begun yielding results, and economic indicators are improving,” he affirmed.
He emphasized that both local and foreign investors are now being actively engaged in efforts to boost economic growth. “Multinational companies repatriated $2.3 billion in profit in the fiscal year ending June 30, a clear sign that issues like blocked profit repatriation and letters of credit have been resolved,” the finance minister noted.
He stressed the crucial role banks must play in reviving ailing industrial units and urged their active participation in the privatization process. Following a meeting with the central bank governor and heads of commercial banks, Aurangzeb added, “We have asked commercial banks and the SBP how they plan to contribute to economic stability. Their role is vital.”
Aurangzeb clarified that the Federal Board of Revenue’s (FBR) new enforcement powers are specifically linked to sales tax, not income tax. He also announced a simplification of the tax return filing process for salaried individuals and small businesses. “An easy tax form is now available on the FBR website. It will also be offered to small traders and SMEs,” he stated.
Addressing a question about fiscal relief, he said: “We’ve provided as much relief to salaried individuals as possible within the available fiscal space.” He further added that while every finance minister desires rapid growth, such a move could strain foreign exchange reserves. Therefore, any decision to reduce the interest rate must be carefully evaluated and is ultimately the prerogative of the SBP.
Finance Minister Engages with OICCI Leadership on Economic Outlook
In a separate development, the Overseas Investors Chamber of Commerce and Industry (OICCI) hosted Finance Minister Muhammad Aurangzeb for a high-level dialogue with senior leadership from major multinational companies operating in Pakistan.
During the session, Aurangzeb shared “encouraging signs” of improving macroeconomic indicators and rising business confidence, which is also reflected in the latest OICCI Business Confidence Survey. The Overseas Investors Chamber of Commerce and Industry (OICCI) hosted Finance Minister Muhammad Aurangzeb for a high-level dialogue in Karachi on July 14, 2025.
“We are witnessing early signs of macroeconomic recovery, but to break free from recurring cycles of instability, Pakistan must take bold and sometimes difficult decisions,” said Aurangzeb. “The government is fully committed to supporting the business community by ensuring a transparent, predictable, and investment-friendly environment.”
Responding to concerns raised by OICCI members, he assured them of the government’s resolve to address policy challenges and unlock the country’s full investment potential. The finance minister also urged investors to explore key high-potential sectors for investments, including Mining and Minerals, Agriculture, IT, and Infrastructure, among others.
Speaking on the occasion, OICCI President Yousaf Hussain acknowledged the government’s progress in stabilizing the economy and underscored the importance of strengthening institutions. “We welcome the improving macroeconomic indicators and renewed signs of stability. To convert this into sustained growth, we must strengthen our institutions, invest in professional capacity, and ensure consistent policymaking,” he said. He added that the induction of qualified technocrats and timely execution, particularly through a comprehensive national economic recovery plan, are essential for moving forward.
