Pre-Budget 2025-26: Aurangzeb hints at single-digit interest rate

Pre-Budget 2025-26: Aurangzeb hints at single-digit interest rate

Islamabad, February 3, 2025 – In a promising development for Pakistan’s economy, Federal Finance Minister Muhammad Aurangzeb has suggested that the country’s policy interest rate could be reduced to a single-digit figure in the near future.

Addressing a pre-budget discussion session with the leadership of the Islamabad Chamber of Commerce and Industry (ICCI), Aurangzeb reaffirmed the government’s commitment to providing comprehensive support for the capacity building and financing of small and medium-sized enterprises (SMEs).

Aurangzeb emphasized the role of the private sector in driving Pakistan’s economic recovery and urged businesses to take a proactive role in the nation’s economic turnaround. He reassured the business community that the government is dedicated to creating a supportive policy environment that will foster growth and stability. He expressed optimism about the economic direction of the country, citing a series of positive developments over the past 12 months, including a decrease in the policy interest rate, an increase in both local and foreign investments, and a significant drop in the inflation rate to 2.41%. Aurangzeb promised that the government would ensure that the benefits of these improvements would reach the general public.

The Finance Minister outlined the key focus areas for the upcoming budget for fiscal year 2025-26, noting that the government is in the process of aligning the budget with its long-term economic vision, known as “Uraan, Pakistan.” He also stressed the importance of stable economic policies and continuity in governance to attract further investments and create a favorable business climate. The Federal Board of Revenue (FBR) has solicited tax-related proposals from stakeholders, aiming to broaden the tax base, introduce progressive taxation, and simplify tax laws to ease the burden on businesses.

Aurangzeb praised the comprehensive proposals put forth by the ICCI leadership for the next budget. He assured that similar proposals from other chambers would be carefully considered, and the government would strive to incorporate them in the final budget to enhance the ease of doing business and drive economic growth. This collaborative approach, according to the Finance Minister, will help foster a business-friendly environment conducive to sustained economic progress.

Minister of State for Finance, Ali Pervez Malik, also participated in the session, lauding the visionary leadership of Prime Minister Shehbaz Sharif for making bold decisions to stabilize the country’s economy. Malik highlighted the government’s achievements in reducing food inflation, curbing the current account deficit, and stabilizing the Pakistani rupee, all of which have contributed to the country’s overall economic health. He emphasized the government’s focus on export-led growth and stated that every sector in the country must contribute to boosting exports.

Nasir Mansoor Qureshi, President of the ICCI, welcomed the government’s efforts to engage with the business community in shaping the budget. He expressed confidence that through a joint effort between the government and the private sector, Pakistan could overcome its economic challenges and achieve sustainable growth. He also highlighted the ICCI’s proposals for the budget, which include tax reforms, energy tariff reductions, incentives for special economic zones, and support for SMEs and startups, among others.

Atif Ikram Sheikh, President of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), commended the government’s efforts to stabilize the economy but stressed the need for more decisive measures to improve the ease of doing business. Rashid Mehmood Langrial, Chairman of the FBR, assured the business community that the issues concerning his department would be addressed transparently.

The session was attended by numerous prominent figures from the business community, including ICCI executive members, former presidents, and other key stakeholders. The discussion underscored the importance of collaboration between the government and private sector in steering Pakistan towards a brighter, more prosperous economic future.