Businessmen underscore need for further cut in interest rate

PESHAWAR: Members of the Business community pinned high hopes about a reduction in interest rate in the forthcoming meeting of the State Bank monetary policy committee, as it wants to bring it down to single digit.

Traders while talking to this scribe here on Saturday said bringing the policy rate into single digits is essential for revival of industries, ease of doing business and putting the economy on a path of sustainable growth.

They urged the central bank to realign its monetary policy with ground realities, warning that the current interest rate regime is strangling the economy and burdening taxpayers. Traders called on the government to create a pro-business environment by cutting interest rates, lowering power tariffs, and supporting export-led growth.

Junaid Altaf, president of the Sarhad Chamber of Commerce and Industry while giving reference to the official figures and reports economic indicators, stated inflation hovering below five percent and argued that the policy rate of 10.5 percent is completely unjustifiable. He further noted that Pakistan’s interest rate is nearly double that of regional competitors.

Junaid Altaf emphasized the business community has consistently raised concerns that high borrowing costs are creating significant challenges. Businessmen are being left in an outlandish situation when competing international competitors who operate under more favourable lending conditions, he remarked.

Explaining key reasons and ground realities of reduction in policy rate, President Junaid Altaf stated that business community is being demanding for long time for bringing down policy rate at single digit, because currency value increase, besides macroeconomic indicators support and surge of domestic demand, improvement in industrial activities, record of inflation at below 5.1 percent, besides, 1.6billion dollar foreign exchange reserves in State bank can reduce the current accounts deficit.

Furthermore, he clarified that the pressure of domestic debt of Rs 1.18 trillion may also lower by reduction in policy rate. Also, he said Pakistan rupees would be strengthened and overall industrial growth is expected to increase by 3.7 percent.

He said the reduction in interest rate will lead the country toward sustainable economic growth and businesses and industries will grow rapidly. However, he lamented the concerns have been consistently ignored by the policymakers, and the business community always showed displeasure over status-quo in the policy rate.

According to Junaid Altaf, businessmen may still be operating, but profit margins are shirking drastically, making it difficult for firms to cover the expenses.

SCCI chief urged SBP to bring down the policy rate to single digit, with a target of 6 percent by next three to four months, aligning Pakistan with regional benchmarks and unlocking economic potential.

“Reducing the interest rate would not only cut domestic debt servicing costs by half but also stimulate business activity, create jobs, and make Pakistan competitive in global markets,” he asserted.