The Pakistan Banks Association (PBA) welcomed the Federal Budget for FY 2026-27 as the first in years to move beyond crisis management and make deliberate choices for growth, without abandoning the discipline that earned Pakistan its recovery.
The industry meets this moment from a position of genuine strength, backed by the most favourable macro backdrop in over a decade: a policy rate well off its peak, a primary surplus restored, and sovereign ratings upgraded by Moody’s, Fitch and S&P. Pakistan’s banks are ready to finance not just the State, but the wider economy.
The Budget keeps faith with fiscal discipline, holding the deficit at 3.6% of GDP and a primary surplus of 2%, while extending real relief through lower personal income tax, a reduction in super tax for the wider corporate sector, support for exporters, and an extension of the concessional regime for IT and IT-enabled services to 2029. Growth is targeted at 4%, with independent analysts seeing further upside as confidence returns. The Association sees this balance – caution on the fiscal accounts, ambition on growth – as exactly the right setting, and one in which private credit, rather than public borrowing, can do the heavy lifting.
The banking industry has not waited to be asked. Over the past two years, it has repeatedly used its own balance sheet, at no cost to the exchequer and without sovereign guarantees, to unlock problems that had stalled the economy:
Circular Debt: Coordinated the restructuring of Rs 1.225 trillion of power-sector circular debt at concessional rates, easing a burden that had choked the energy chain for years.
PIA Privatisation: Restructured Rs 268 billion of PIA debt, clearing the way for the first major privatisation in two decades.
Export Competitiveness: Voluntarily reduced its margin on the Export Refinance Facility, bringing the cost of export financing down to 4.5% – acting ahead of the curve to keep exporters competitive. Pakistan’s banks are strong, liquid and well capitalised, with a capital adequacy ratio of 21.4%, ahead of regional peers, and remain the most transparent and digitally advanced sector in the economy.
That strength is what makes the commitments below credible. Commenting on the Budget, Zafar Masud, Chairman PBA, said: “This is a Budget the industry can build on. The conditions for priority-sector lending are the best in over a decade.
We intend to use them for the benefit of our economy, our businesses, and our people. Our commitment is concrete: to drive SME financing from Rs 882 billion towards Rs 1.5 trillion by 2028, to revive mortgage & housing finance to achieve the 500,000 units target of the government by 2028, agriculture financing to cross Rs. 3.5 trillion disbursements during a year by 2028, promoting social impact projects, particularly in education and skill development, by leveraging the budgetary allocations to meet the international health and education funding commitment standard benchmark of 5%+ each, and to keep export credit flowing at competitive rates.
To make the most of this positive environment, we look forward to working with the Government and the State Bank of Pakistan on a consistent and predictable tax regime, documentation that reinforces financial inclusion, and risk-sharing that unlocks lending to priority sectors with both social as well as economic multipliers for sustainable growth.”
Measures in the Budget to revive property and housing, digital payments, exports and technology are expected to support a recovery in private credit. The breadth of recent progress underscores the point: workers’ remittances reached a record USD 38.3 billion, the Roshan Digital Account has channelled over USD 12 billion through formal channels, and the banking system now serves some 103 million depositors across nearly 268 million deposit accounts.
Muneer Kamal, CEO & Secretary General – PBA, added: “What stands out about this Budget is its shift from stabilisation towards growth, and the banking industry is ready to carry its share of that load. We will keep credit flowing to the productive sectors – housing, exports, technology and, above all, the SMEs that will drive the next phase of job creation.
The foundations are strong, the outlook is encouraging, and the industry is fully committed to building on both.” An Unprecedented Response on SME, Agriculture and Housing Nowhere is this clearer than in the priority programmes.
Over the last two years the industry has delivered in an unparalleled fashion across SME, agriculture and housing: SME financing has almost doubled in both volume and the number of borrowers; the long decline in agriculture borrowers since 2019 has been arrested and the number has exceeded 3 million borrowers to reach 4 million by 2028; and in low-cost housing the industry approved Rs 100 billion to some 67,000 beneficiaries in just two months – against a cumulative industry total of around 65,000 beneficiaries and Rs 225 billion over the preceding six years.
These successes on the priority sector lending front are primarily owed to the various Government schemes and interventions, conceived and launched in collaboration with the industry, and the industry is surely responding in an unprecedented way. The Association reaffirmed that, with these foundations in place, the industry stands fully behind the Government’s growth agenda as the recovery takes hold.