Pakistan ERF Markup Cut: Banks Reduce Export Refinance Rate by 3%
The Pakistan ERF markup cut offers fresh hope to exporters across the country. Pakistan’s banking sector has reduced the Export Refinance Facility (ERF) markup by 3 percent. As a result, exporters will now access financing at 4.50 percent. The Pakistan Banks Association (PBA) announced the decision on Wednesday. This new rate applies to all new loans and rollovers, effective immediately.
Flexible Limit and Strong Credit Growth
Currently, the ERF operates under a PKR 1,052 billion limit. However, this cap may increase if the State Bank of Pakistan or EXIM Bank expands it before June 2027. Therefore, exporters may see even more support in the coming years. In addition, banking data shows strong credit growth. During FY25, private sector credit rose by Rs 1.1 trillion. This figure stands much higher than Rs 470 billion recorded in FY24.
Inclusive Lending Across Key Sectors
Banks have also expanded support to small businesses. The SME borrower base jumped by 57 percent. Moreover, lending to SMEs doubled over the past two years. Agriculture financing also improved sharply. The borrower base grew from 2.7 million to nearly 3 million. Disbursements reached a record PKR 2.58 trillion. As a result, rural communities gained better access to capital. Private sector credit continued rising in FY26. It increased by Rs 654 billion during the first half alone. Meanwhile, banks also financed Rs 1.95 trillion in government borrowing, despite fiscal pressure.
Banking Sector Stands Behind Economic Stability
According to PBA Chairman Zafar Masud, this move goes beyond numbers. He stressed that export growth remains vital for national stability. By offering competitive rates, banks aim to strengthen foreign exchange inflows.
The sector has also supported major reforms. For example, it played a role in reducing circular debt and facilitating the privatization of Pakistan International Airlines. Looking ahead, the PBA plans to promote financial inclusion. The goal remains simple. Banks want to reward investors and ensure economic benefits reach everyone across Pakistan.
