Business Leaders Criticize Pakistan’s Monetary Policy Amid Economic Concerns

Karachi: Business leaders in Pakistan have expressed dissatisfaction with the recent monetary policy changes, which they argue do not sufficiently address current economic challenges. The State Bank of Pakistan announced a reduction of 100 basis points in the policy rate, a move deemed inadequate by industry representatives, who had hoped for a more substantial cut to stimulate economic growth.

According to a statement by Federation of Pakistan Chambers of Commerce and Industry, Atif Ikram Sheikh, the organization’s president, highlighted the disparity between the policy rate and core inflation. With the policy rate at 12.0 percent and inflation reported at 4.1 percent in December 2024, the business community had advocated for a 500 basis point cut to better align monetary policy with economic realities.

Mr. Sheikh emphasized that the current monetary policy does not reflect the government’s vision for economic growth and is misaligned with the goals of the Special Investment Facilitation Council. He noted that core inflation is projected to remain stable, and international oil prices, a significant inflation driver, are expected to stay consistent, suggesting conditions were ripe for a more aggressive rate cut.

In addition to monetary policy adjustments, the FPCCI has called for other economic reforms. Saquib Fayyaz Magoon, Senior Vice President of FPCCI, proposed reducing the interest rate to single digits and revisiting electricity tariffs to improve the competitiveness of Pakistani exporters. He also recommended renegotiating power purchase agreements to alleviate financial burdens on industry and consumers.

The FPCCI, representing Pakistan’s business community, has repeatedly urged the government to enhance transparency and consultation in economic policymaking. The organization seeks clarity on how government measures will align with International Monetary Fund commitments and affect the cost of doing business, as well as strategies for restoring economic growth.

The concerns voiced by FPCCI underscore the challenges facing Pakistan’s business sector as it navigates a complex economic landscape.

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