Mohammad Kamran Arbi, President of the Site Association of Industry Karachi, has described the recent reduction in interest rates as insufficient. He has urged the State Bank of Pakistan to implement a further cut, aiming to bring the rate to a single digit to help reduce production costs. According to Arbi, high interest rates significantly burden industries, making it difficult for them to compete in global markets under these conditions, a situation that demands our empathy and support.
In a statement issued on Monday, Mr Arbi emphasised that a single-digit policy rate was proposed in the budget proposals by the SITE Association of Industry to address the heavy strain on purchasing power due to rising production costs.
He said that 80% of borrowing is currently by the government, while 20% to 22% is by the private sector. A 2% reduction in the policy rate could create fiscal space of approximately 650 billion, thereby providing additional budgetary space for the government. This additional budgetary space could be used for development projects, social welfare programs, or to reduce the fiscal deficit.
“The global business environment is evolving, with the ease creating space for lower interest rates and thereby increasing economic activity. Pakistan should consider adopting a similar approach.”
He also expressed disappointment over the modest rate reduction in the recent monetary policy review. He has requested that the central bank further lower interest rates to address the high production costs and encourage industrial growth. He believes that reducing the burden of costly loans will not only positively impact the economy but also significantly enhance the country’s export performance, bringing hope for a brighter economic future.
SAI President criticised the tight monetary policy, noting that the high cost of loans makes it difficult for industries to operate effectively. He called for substantial interest rate reductions to provide relief and support industrial operations.
Kamran Arbi hopes that the State Bank will take measures to reduce interest rates to single digits in its next monetary policy announcement, which the industrial community would greatly welcome.
