6-Month KIBOR Down to Roughly 3-Year Low As Inflation Rate Slows

Pakistan’s benchmark interest rate is currently trading blows at 11.89 percent as of January 10, 2025, according to latest data by the State Bank of Pakistan. The benchmark 6M Karachi Inter-Bank Offered Rate (KIBOR) is 111 bps lower than the central bank’s key lending rate which stands at 13 percent. According to Topline Securities, the key lending rate is approximately at a 3-year low. In the last one and a half years, the lending rate has halved from a peak of 24.68 percent on the back of falling inflation. Overall, the 3M, 6M, 9M, and 12M KIBOR rates have decreased by 21bps, 23bps, 31bps, and 26bps in January 2025 so far. Sources privy to central bank operations informed ProPakistani that banks are offering new credit to businesses and individuals at below the benchmark lending rate to avoid paying more tax if their advance-to-deposit ratio falls short of the government-determined threshold. For now, the 15 percent additional tax on bank profits has been abolished while the standard corporate tax has been increased to 44 percent.