KARACHI: The United Business Group (UBG) leadership, comprising S.M. Tanveer, Zubair Tufail, Khalid Tawab, Hanif Gohar, and Syed Mazher Ali Nasir, expressed disappointment over the State Bank of Pakistan’s (SBP) recent 100bps policy rate cut, urging further reductions to stimulate economic revival and growth. The business community had anticipated a more substantial cut of 300-500bps to address the high cost of doing business. The UBG leaders described the 19.5% policy rate as “disappointing” and emphasized the need for additional cuts to keep the economic wheels turning. Despite descending inflationary trends, the UBG leaders had expected a more significant reduction.
They noted that lower interest rates, aligned with international trends, would encourage private sector borrowing, facilitating business expansion and industrialization. The leaders highlighted that inflation has decreased to 11%, down from 38%, due to government administrative measures, and improved agricultural production. They cited excellent crop production and the stability of the rupee value as key factors in easing inflation.
The UBG leaders view the recent rate cut as a positive step but urge further reductions to support the business community, which faces challenges like inflationary effects of increased power tariffs, higher petroleum development levies, and imposition of taxes on essential items. They believe a lower interest rate will encourage private sector borrowing and economic activities.
They further suggested the government could manage inflation and accelerate reduction in policy rate by reducing taxes included in lower power tariff.