KARACHI: 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 place a significant burden on industries, making it difficult for them to compete in global markets under these conditions.
In a statement issued on Monday, Mr. Arbi emphasized that a single-digit policy rate was proposed in the budget proposals by SITE Association of Industry to address the heavy strain on purchasing power due to rising production costs.
He said that currently, 80% of borrowing is by the government, while 20% to 22% is by the private sector. A 2% reduction in the policy rate could potentially create fiscal space of approximately 650 billion, thereby providing additional fiscal space for the government.
“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 the central bank to address the high production costs and encourage industrial growth by lowering interest rates further. He believes that reducing the burden of costly loans will positively impact the economy and significantly enhance the country’s export performance.
SAI President criticized 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 would be greatly welcomed by the industrial community.