APTMA Urges Government to Reduce Interest Rates Amid Inflation

ISLAMABAD: The All Pakistan Textile Mills Association (APTMA) has made an urgent appeal to the government for reducing interest rates. This request comes in light of the recent inflation data, which shows that prices have increased by 11.8% compared to last year. Despite this rise in prices, the real interest rates in Pakistan are now the highest in the region, making it difficult for businesses to borrow money and grow.

The current policy rate in Pakistan is set at 19.5%. When we look at the real interest rate, which is the interest rate adjusted for inflation, it stands at 8.41%. This is significantly higher than the rates in neighboring countries. For instance, China has a real interest rate of only 3.21%, while India’s is even lower at 1.4%. In fact, countries like Bangladesh and Turkey are facing negative real interest rates, meaning that the cost of borrowing is less than the rate of inflation.

APTMA argues that the high real interest rate, along with new taxes and royalties imposed by the government on various sectors, is making it hard for businesses to operate. They believe that lowering interest rates is essential for encouraging economic activity. By making it cheaper to borrow money, businesses can invest in growth, create jobs, and help the economy recover from recent challenges.

The APTMA's call for lower interest rates highlights the urgent need for economic support in Pakistan. Reducing borrowing costs could provide a much-needed boost to various sectors, helping to offset the negative impacts of recent fiscal measures. It is crucial for the government to consider these recommendations to foster a healthier economic environment for all.