UBG President Calls for SBP to Slash Policy Rate to Single Digit

Karachi: President of the United Business Group (UBG), Zubair Tufail, has called on the State Bank of Pakistan (SBP) to reduce the policy rate to single digits in the upcoming monetary policy announcement scheduled for September 15.

In a statement released by UBG’s central spokesperson, Gulzar Firoz, Tufail expressed his concerns about the current interest rate of 11%, which he believes hampers private sector borrowing and investment. He noted the disappointment within the business community following the SBP’s previous decision to maintain the rate at its current level, despite economic indicators suggesting a reduction.

Tufail warned that without a significant cut in the policy rate, efforts to revive the country’s economy would be slow. He highlighted that Pakistan’s interest rate is among the highest in the region, surpassing those of neighboring countries like China, India, Vietnam, Thailand, and Bangladesh. This, he argued, affects the competitiveness of Pakistani exports and industries globally.

“The high borrowing costs are particularly detrimental to small and medium enterprises (SMEs), which are crucial to our economy,” he stated. Tufail stressed that exporters and local businesses are struggling with high financing costs, which stifle their growth and ability to compete internationally.

Furthermore, Tufail pointed out that the current macroeconomic conditions, including a record-low inflation rate, justify a substantial cut in the interest rate. He urged the SBP’s Monetary Policy Committee to consider the on-the-ground realities and support industrial growth, job creation, and overall economic progress.