Pakistan Lowers NPC Returns Amid Policy Rate Cuts

The federal government has announced a reduction in the returns on Conventional Naya Pakistan Certificates (NPCs), following a significant decline in the policy rate over the past six months. This marks the first adjustment in NPC returns since the State Bank of Pakistan (SBP) initiated monetary easing in June 2024.

In a bid to stimulate economic growth and respond to a more favorable inflation outlook, the SBP's monetary policy committee enacted a cumulative 10% reduction in the key policy rate. As a result, the government officially revised NPC returns, with the new rates taking effect on February 20, 2025.

The adjusted rates now reflect a decrease of 8.50% on the 12-month NPCs, which now offer a 13% return, compared to the previous 21%. Returns for 3-year and 5-year NPCs have dropped to 12.50%, down from 17.50% and 15%, respectively. Similarly, 3-month and 6-month NPCs will offer a return of 13.50%, reduced from 21% and 21.25%.

For investments in US dollars, the return rates have been reduced by as much as 2%. The 3-month and 6-month NPCs now yield a 7% return, down from 8.25% and 8.50%. The 12-month return has also fallen to 7%, down from 9%. For the 3-year and 5-year periods, the return is now 7.50%, down from the earlier 8%.

In the British Pound (GBP) category, returns for the 3-year and 5-year investments remain steady at 7.50%. However, the 6-month and 12-month rates have been adjusted downward to 7.25%. For the Euro (EUR) investments, returns on 3-month and 6-month NPCs have decreased to 5.25%, from 6.25% and 6.50%, respectively. Meanwhile, the 12-month, 3-year, and 5-year returns for Euros are now fixed at 5.25%.

This reduction in NPC rates is consistent with the government’s broader monetary policy strategy, aimed at managing inflation and ensuring fiscal prudence. The official notification for the revised rates was issued by the Finance Division (External Finance Wing) through Gazette Notifications S.R.O. 33(I)/2025 and S.R.O. 174(I)/2025, published on January 16 and February 12, 2025.