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Karachi: The Karachi Chamber of Commerce & Industry (KCCI) President, Muhammad Jawed Bilwani, has stressed the urgent necessity for the State Bank of Pakistan (SBP) to align the nation’s monetary policy rate with regional standards. This move aims to bolster economic growth and alleviate pressures on businesses.
According to a statement by Karachi Chamber of Commerce and Industry, Bilwani proposed that instead of advocating for specific interest rate cuts, policymakers should strategically benchmark Pakistan’s key policy rate against neighboring nations like China and India. These countries have significantly lower rates of 3.1 percent and 6.5 percent, respectively, which create a more favorable business environment and facilitate access to affordable credit.
Bilwani pointed out the challenges posed by Pakistan’s current 13 percent monetary policy rate, which remains substantially higher than those of its regional counterparts. He explained that elevated rates deter investment and increase borrowing costs for businesses, especially small and medium enterprises that form the economic backbone.
The KCCI President highlighted Pakistan’s progress in reducing inflation to 4.1 percent by December 2024, the lowest in over six years. He contrasted this with China’s inflation rate of about 0.7 percent and India’s rate of approximately 6 percent, underscoring the different fiscal and monetary strategies in the region.
Bilwani explained that while Pakistan’s inflation has improved, it is crucial to adjust the monetary policy rate to regional benchmarks. This adjustment would not only improve the business environment but also enhance Pakistan’s competitiveness globally.
He also noted the impact of high-interest rates on loan accessibility, explaining that many small businesses struggle to secure financing or face unsustainable repayment terms. This situation affects individual enterprises and the broader economy, as limited credit availability leads to slower growth in industrial output and job creation.
President KCCI urged the SBP and government to focus on economic stability and long-term growth rather than short-term fiscal measures. He recommended aligning the interest rate with regional averages to foster an environment conducive to investment and industrial growth.
Bilwani concluded by emphasizing the necessity of addressing inflation and aligning interest rates with regional benchmarks to ensure sustainable growth and competitiveness. Failure to act, he warned, would further isolate Pakistan from the economic progress of its neighbors.
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