KARACHI: President of the United Business Group (UBG), Zubair F Tufail, former Senior Vice President of FPCCI Mazhar Ali Nasir, and other UBG leaders have demanded a reduction in interest rates by at least 400 to 500 basis points at the Monetary Policy Committee meeting of the State Bank of Pakistan scheduled for Monday.
Zubair Tufail stated that the cost of doing business, ease of doing business, and access to finance are facing significant challenges compared to competitors in export markets. In these circumstances, the business, industrial, and trading community expects the Monetary Policy Committee to make a substantial reduction in interest rates to a realistic level, as the current rate is based on a heavy premium compared to the fundamental inflation rate.
He noted that private sector lending in Pakistan has dropped to the lowest level among emerging markets, constituting only 12.0% of GDP as of 2023. The inability to compete with rival countries in the global market has adversely affected industry and exports. It is a fact that the State Bank has successfully controlled inflation; however, its stringent monetary policy is creating an unbalanced lending environment.
Mazhar Ali Nasir remarked that the UBG’s patron-in-chief and business community leader SM Tanveer has been consistently advocating for a reduction in interest rates, as he is aware of the issues faced by exporters and industrialists.
The Monetary Policy Committee is urged to immediately reduce the interest rate to 12.5% to enable Pakistani exporters to significantly lower their cost of capital and compete in regional and international export markets.
Mazhar Ali Nasir emphasized that reducing interest rates will help revive economic activities, increase government revenue, and create more job opportunities.
Copyright Business Recorder, 2024
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