KARACHI: The business community has called for a major cut in the interest rate ahead of the Monetary Policy Committee meeting scheduled for July 30, urging the State Bank of Pakistan to lower the policy rate to support industrial activity and job creation.
Junaid Naqi, President of the Korangi Association of Trade and Industry, said the policy rate must be reduced substantially, noting that inflation had fallen to 3.2 percent in June while the current interest rate remains at 11 percent. He said there is no justification for keeping rates this high.
Naqi said Pakistan’s industrial sector is under pressure, with factories running at partial capacity, reduced new investments, and low business confidence. He said urgent support from the government and central bank is necessary to revive the sector and increase exports.
He added that Pakistan’s GDP grew by only 2.1 percent in the last fiscal year, which is well below regional levels. He said with proper support and a business-friendly environment, growth could improve.
Naqi also criticized the continuation of old monetary policies that he said are harming economic recovery. He said many countries are cutting interest rates to boost activity, while Pakistan’s approach is creating barriers.
He warned that without relief, the country could face more unemployment, falling investment, and missed revenue targets.
He called on the central bank to take realistic and responsive decisions, expressing hope that it will recognize the current industrial challenges and make a meaningful interest rate cut.
Khawaja Mehboob ur Rehman, President of the Pakistan Business Forum, said after discussions across all major industries, the forum is demanding an immediate 500 basis point cut in the policy rate in the upcoming meeting.
He said this action is needed to align with the Special Investment Facilitation Council’s goals and the prime minister’s broader economic and export strategy. Rehman said the current monetary policy is out of step with inflation trends, with core inflation at 4 percent and the Consumer Price Index at 0.3 percent, while the policy rate remains at 11 percent.
He said the business community is dissatisfied with the high borrowing costs, which are placing a burden on productive sectors. The forum said a sharp rate cut is required to revive industrial output, attract private investment, and improve export competitiveness.
The forum also said lower interest rates would support growth in small and medium enterprises, increase employment, and reduce the government’s debt servicing cost by an estimated Rs 3.5 trillion per year.
The Pakistan Business Forum urged the central bank to adopt a pro-growth approach in the July 30 policy meeting, reflecting improvements in the country’s macroeconomic indicators.
The forum also called on the central bank to require banks to provide fair and accessible credit to small businesses and startups. It said banks have focused mostly on lending to the government and neglected private sector borrowers.
The forum highlighted that businesses in Balochistan are especially affected, with many excluded from the credit system, which it said goes against the Constitution’s guarantees.
