KARACHI: Leaders of the United Business Group (UBG), including SM Tanveer, Zubair Tufail, Khalid Tawab, Hanif Gohar, Syed Mazher Nasir, Malik Khuda Bakhsh and Momin Ali Malik have expressed their disappointment with the recent 1.5 percent cut in the policy rate announced by the State Bank of Pakistan (SBP).

The business community was expecting a more substantial reduction to stimulate economic growth and address the high cost of doing business.

Reacting sharply to the policy cut, the UBG leaders described the reduction to 20.5% as “bit disappointing” and “beyond expectations”. They emphasized the need for the SBP to further reduce the policy rate to single digits to keep the economic wheels turning.

Commenting on the SBP’s decision, the UBG leaders noted that despite the descending inflationary trends, a more significant reduction of at least 4 to 5% was anticipated. “A mere 1.5% reduction is disappointing, but we remain hopeful for further cuts as the SBP continues to ease monetary policy,” they stated. They highlighted that lower interest rates, in line with international trends, would encourage private sector borrowing, facilitating business expansion and industrialization.

The leaders pointed out that inflation has significantly decreased to slightly above 11%, down from a peak of 38%. However, they argued that this reduction was not due to the SBP’s tight monetary policy but rather to the government’s administrative measures, improved agricultural production, and reduced petroleum prices. They cited excellent production of wheat, rice, sugarcane, cotton, and maize as key factors in easing inflation.

They also mentioned that the stability of the rupee value has played a crucial role in controlling inflation. The crackdown on black-marketing, illegal currency trade and dollar smuggling has contributed to the stability of the Pak rupee, further easing inflation pressures.

The UBG leaders view the recent rate cut as a positive first step but urge further reductions to support the business community. “A lower interest rate will be welcomed by the entire business community, which has been severely impacted by the high cost of doing business,” they concluded.

Copyright Business Recorder, 2024