FPCCI calls for interest rate reduction

The recent decision by the State Bank of Pakistan to lower the policy rate has sparked mixed reactions from the business community. Despite a decrease in core inflation to 11.8 percent in May 2024, concerns have been raised regarding the adequacy and timing of the rate cut. The President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed dissatisfaction, calling for a more substantial reduction in interest rates to boost the competitiveness of Pakistani exporters in the global market. Additionally, there are calls for the government to fulfill its commitment to rationalize electricity tariffs for industries.

On the consumer front, there has been a positive trend in prices, with a notable 3.2 percent decline in May 2024. To further support businesses in accessing affordable finance, there are appeals for a reduction in the key policy rate to 15 percent. The FPCCI has stressed the importance of transparency and stakeholder consultation in economic decision-making processes, raising questions about the government's adherence to these principles.

Post the signing of the IMF program, efforts to stabilize the economy have been deemed critical, with a specific focus on achieving price stability and curbing inflation. Recommendations include targeting core inflation, combating price manipulation, and strengthening the oversight role of regulatory bodies such as the Competition Commission of Pakistan.

Despite previous increases in the policy rate, overall inflation levels have remained elevated, signaling the necessity for alternative strategies to tackle economic challenges. Industry representatives have underscored the significance of implementing investment-friendly policies to safeguard the economy against further instability.

The ongoing debate surrounding the State Bank of Pakistan's recent policy rate adjustment reflects the complexities of balancing economic priorities. While stakeholders advocate for more aggressive measures to stimulate growth and enhance competitiveness, the government faces the challenge of navigating a delicate economic landscape. Moving forward, a collaborative approach that incorporates diverse perspectives and focuses on sustainable economic development will be crucial in addressing the evolving needs of Pakistan's economy.