President Karachi Chamber of Commerce & Industry (KCCI), Muhammad Rehan Hanif, has expressed deep disappointment over the State Bank of Pakistan’s decision to reduce the policy interest rate by a mere 0.5 percent, stating that such a token adjustment falls far short of what is urgently required to revive Pakistan’s fragile economy and restore business confidence.
In a statement issued here, Rehan Hanif remarked that the marginal cut neither reflects prevailing economic realities nor offers meaningful relief to businesses that are already struggling under an exceptionally high cost of doing business. He emphasized that despite a visible decline in inflation, borrowing costs in Pakistan remain among the highest in the region, severely undermining industrial growth, exports, and employment generation.
“The policy rate in Pakistan continues to hover at an unsustainably high level, whereas regional economies such as China, India, Bangladesh, Vietnam, Indonesia and Sri Lanka maintain single-digit interest rates, enabling their industries to access affordable financing, expand capacity, and remain competitive in global markets,” he said. “In contrast, Pakistani businesses are being denied the same opportunity, placing them at a serious disadvantage.”
President KCCI pointed out that industries in Pakistan are currently burdened with multiple cost pressures, including exorbitant energy tariffs, high fuel prices, excessive taxation, escalating logistics costs, volatile exchange rates, and rising compliance and regulatory expenses. Under such circumstances, he stressed, the continuation of a high interest rate regime further suffocates productive economic activity and discourages both local and foreign investment.
Rehan Hanif noted that the government’s own objectives of industrial revival, export-led growth, job creation, and expansion of the tax base cannot be achieved unless credit becomes affordable. “When the cost of financing remains prohibitively high, businesses defer expansion plans, shut down marginal units, and reduce employment, ultimately leading to lower economic output and reduced government revenues”, he added.President KCCI reaffirmed that the business community stands ready to support economic stabilization efforts but stressed that stability must go hand in hand with growth. “A cautious, incremental approach at this critical juncture risks prolonging economic stagnation. What Pakistan needs today is a bold and decisive cut in interest rates to unlock growth, protect jobs, and enhance competitiveness”, he concluded.
