Pakistan Business Forum advocates for interest rate reduction

The Pakistan Business Forum (PBF) has urged for a significant decrease in the interest rates to stimulate economic growth and enhance productivity. The forum emphasized the necessity of lowering the monetary policy rate to a single digit, stating that the current high interest rates are adversely affecting the economy. It proposed involving both local and foreign investors in decision-making processes to address the genuine concerns of the business community, which could result in a positive economic transformation.

The President of PBF highlighted the potential advantages of reducing the interest rates, foreseeing a 250 basis points reduction in the policy rate to 20%. This projection is supported by favorable economic indicators, signaling a conducive environment for a shift in the monetary policy stance. The anticipated rate cut is viewed as a measure to bolster economic expansion and align with the changing economic landscape.

One of the primary drivers behind the expectation of a rate cut is the downward trajectory of inflation in Pakistan. Both headline and core inflation metrics have exhibited notable improvements, with the average headline inflation for the current fiscal year dropping to 25.97% from 28.23% in the previous year. Furthermore, the current account deficit has shrunk by 95% to $202 million, contributing to the stability of the Pakistani rupee against the US dollar.

The President of PBF recommended a substantial decrease in the key policy rate to single digits to provide the private sector with access to affordable borrowing. He also advocated for lower energy costs for local industries, enhancements in the business environment, reduced production expenses, prompt refund disbursements to tackle liquidity challenges, a consistent energy tariff strategy, and a more lenient import policy for industrial raw materials to foster industrial growth and bolster exports.

The call by the Pakistan Business Forum for a reduction in interest rates reflects a proactive approach towards revitalizing the economy and supporting businesses. With positive economic indicators and a conducive environment for policy adjustments, a potential rate cut could pave the way for increased investment, enhanced productivity, and sustainable economic development in Pakistan.