KARACHI: Despite Prime Minister Shahbaz Sharif’s assurances, the failure to implement a significant reduction in the interest rate is a matter of concern, says Ahmed Azeem Alvi. He added that high-interest loans are hindering economic recovery and discouraging investment.
Ahmed Azeem Alvi, President of SITE Association of Industry Karachi, expressed deep disappointment over the mere 1% reduction in the interest rate, calling this decision a major obstacle to the economic recovery.
In a statement issued on Monday, SAI president stated that despite a continuous decrease in inflation and the gradual improvement of the country, the failure to significantly reduce the interest rate has caused concern within the business community. Although inflation has decreased, it was expected that the State Bank of Pakistan would implement a substantial reduction in the interest rate, but this did not happen. As a result, investor confidence will undoubtedly be discouraged, and the prospects for accelerating business activities have diminished.
Mr. Alvi further added that the business community has been demanding that the interest rate be brought to single digits, and the central bank should have at least reduced it by 1.5%, which would bring the rate to 10% after further cuts in the next monetary policy. Although Prime Minister Shahbaz Sharif has repeatedly spoken about lowering the interest rate, it seems that the bureaucracy is not giving due attention to the Prime Minister’s interest in economic recovery, which should be noticed by the Prime Minister.
He also mentioned that if the State Bank continues to delay the significant reduction in the interest rate, its positive impact on the economy will diminish over time, as timely actions are necessary to promote business and industrial activities. Mr. Alvi expressed hope that the State Bank, after consulting with stakeholders and taking the business community’s demands seriously, will implement a significant reduction in the interest rate in the next monetary policy, which will have a positive impact on the economy.