6-Month KIBOR Drops to Lowest Level in Over 3 Years

Pakistan's 6-month Karachi Inter-Bank Offered Rate (KIBOR) has dropped to 10.86% as of July 25, 2025, reaching its lowest level in 41 months. This significant decline comes shortly after S&P Global upgraded Pakistan’s sovereign credit rating from ‘CCC+’ to ‘B-’, with a stable outlook. The credit rating upgrade was driven by improvements in Pakistan’s foreign reserves and financial position, thanks to support from the International Monetary Fund (IMF).

Currently, the 6-month KIBOR stands just 14 basis points below the State Bank of Pakistan's (SBP) key lending rate of 11%, indicating that the gap between the short-term borrowing costs and the central bank’s policy rate has narrowed considerably. This decrease in KIBOR is a positive development for Pakistan’s financial markets, as it can lead to lower borrowing costs for both businesses and consumers, encouraging investment and economic activity across various sectors.

This reduction in borrowing costs could provide a much-needed boost to the economy, making it easier for businesses to access finance for growth and expansion. Consumers may also benefit from lower loan rates, stimulating demand in sectors like housing, automobiles, and consumer goods.

This trend also signals the financial markets' confidence in Pakistan's ability to manage its debt and maintain its fiscal stability, especially following the IMF-backed economic reforms and the positive adjustment in the country’s credit outlook.

As KIBOR continues to stay low, it provides an opportunity for Pakistan’s businesses and financial sector to take advantage of favorable borrowing terms. The country’s economic growth trajectory is likely to be positively impacted as these changes pave the way for sustainable long-term development.

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