PESHAWAR: Former Senator, Chairman Khyber Pakhtunkhwa Textile Mills Association (KPTMA) and renowned businessman, Salim Saifullah Khan has hailed 200 basis-points cut in the policy rate by the State Bank of Pakistan's (SBP) bringing it down to 17.5%.

In a statement issued here on Friday, he welcomed the decision as a positive step towards supporting the country’s struggling industrial sector and stressed for further aggressive measures to boost competitiveness and economic growth.

Acknowledging the SBP’s efforts, Khan urged a more aggressive reduction in the interest rate to immediately bring it down to 12% to provide relief to industries, with the ultimate goal of settling it down over the time at 6% to 7% in line with regional economies.

He said that they appreciate the downward trend in interest rates, but the cost of borrowing remains unsustainably high, especially for industries such as textiles in Khyber Pakhtunkhwa, which due to high capital cost are struggling to compete both domestically and internationally.

He also highlighted the stability of the Pakistani rupee, which has contributed to easing inflation by reducing the cost of imported goods. “Currency stability has a direct impact on inflation, and with the rupee stabilizing, we are seeing easing down of the inflation rate. However, interest rates must be lowered to at least 12% to provide immediate relief to industries.

Salim Saifullah Khan expressed concern over Pakistan's balance of payments, noting that the outflow of US dollars continues to exceed inflows, creating recurring financial challenges. He stressed that boosting exports is the only sustainable solution to the country’s economic woes. He said that Prime Minister has set an ambitious target of $60 billion in exports over the next three years, with the textile sector contributing share of $33 billion, which is achievable only through export-friendly policies and by significantly reducing the cost of doing business.

Copyright Business Recorder, 2024