Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum, All Karachi Industrial Alliance, and former provincial minister Mian Zahid Hussain said on Friday that inflation in the country is decreasing after two years. He praised the government for reducing the inflation rate from 38 per cent to 12 per cent, stating that the State Bank must now lower interest rates by at least 10%.
Mian Zahid Hussain underscored that a decrease in interest rates would not only relieve the financial burden on the public and the business community but also reduce unemployment and boost exports, fostering a more prosperous economic environment. This potential shift in the economic landscape should instil hope and optimism among the general public.
Talking to the business community, the veteran business leader said that people have been suffering from a 22% interest rate since last year. This rate has seriously affected businesses and promoted unemployment while causing much damage to the government. This year’s interest payment will cost nine thousand billion rupees. A 10% reduction in interest rates will also halve the government’s interest payment burden.
With the consumer price index at 11.8 percent in May, a significant decrease from 17.3 percent in April and a staggering 8.62% decrease from last month, the need for a 10 percent interest rate reduction in the upcoming June 10 meeting is not just important; it’s urgent. The cautious approach has been detrimental to the economy, and immediate action is necessary to improve economic conditions. This urgency should be felt by government officials and policymakers, urging them to act swiftly for the betterment of the economy.
Mian Zahid Hussain said that economic activity in the country has been sluggish for the past two years. The government has implemented some tough reforms under the International Monetary Fund bailout package to stabilize the declining economy, but many of the reforms have been politically motivated.
The ongoing neglect of important reforms and the slow progress of some are not producing the desired results.
He said that experts expect the GDP growth rate to be 2 per cent in the fiscal year ending in June, which was negative last year. The government may keep the growth rate target for the new fiscal year at 3.5 per cent because it expects an increase in economic activity. However, if tax increases and energy prices continue to rise, the expected increase in economic activity will be difficult.
Mian Zahid Hussain said that the government has formally approached the IMF for a new long-term bailout package after completing the short-term program to address the risk of bankruptcy fully.
Staff-level meetings have also been held, and the masses are awaiting positive results. The IMF, which previously insisted on a strict monetary policy to control inflation, has now relaxed its stance following the reduction in inflation. The government ought to capitalise on this opportunity.
