Zubair Tufail Calls for Major Rate Cut to Spur Economic Growth

Karachi: Zubair Tufail, the President of the United Business Group and former head of the Federation of Pakistan Chambers of Commerce and Industry, has urged the State Bank of Pakistan to slash the policy rate by 4 to 5 percentage points in the upcoming monetary policy announcement. The intention is to bring the rate down to single digits to aid in economic recovery and enhance industrial activity.

Tufail highlighted that the current policy rate of 11% is not only the highest in the region but also poses a significant challenge for the business community, especially as inflation has decreased to historically low levels. He warned that a policy rate that falls short of business community expectations would fail to rejuvenate the economy.

Drawing on data from the Pakistan Bureau of Statistics, Tufail mentioned that the inflation rate was just 0.3% in April 2025, a decline from 0.7% in March. He noted that the real interest rate in Pakistan is exceedingly high, which deters investment, hampers production, and restricts job creation.

He also compared Pakistan’s interest rate with other regional economies. In India, the policy rate is 6.0%, Bangladesh 10.0%, Vietnam 3.0%, and Thailand recently reduced its rate to 1.75%. Tufail remarked that these countries are supporting their business sectors, whereas industries in Pakistan are burdened by unsustainable borrowing costs.

Tufail expressed concern for small and medium enterprises, describing them as the backbone of the economy. He stated that SMEs and exporters are experiencing severe difficulties due to the high cost of financing, which harms their global competitiveness and growth potential.

He criticized the SBP’s current monetary policy for being misaligned with the country’s immediate economic needs. Tufail stressed that only a significant reduction in the interest rate would allow industrial and export sectors to achieve their full potential. He advocated for a 4 to 5 percentage point cut in the policy rate, emphasizing its necessity for stimulating economic growth, generating employment, and attracting both domestic and foreign investment.