Karachi : The Chairman of National Business Group Pakistan, the President of the Pakistan Businessmen and Intellectuals Forum, the President of All Karachi Industrial Alliance, the Chairman of the FPCCI Advisory Board, and the President and former provincial minister, Mian Zahid Hussain, said on Saturday that the sixth cut in interest rates is welcome. Still, the pace of continuing interest rate reduction is slow because the central bank does not want to repeat past mistakes.
The business community has been disappointed with only a one percent reduction in interest rates.
Mian Zahid Hussain said that the State Bank had reduced the interest rate by one percent in the new monetary policy, after which this rate has come to 12 percent in the country.
Talking to the business community, the veteran business leader said the sixth consecutive cut in interest rates since April last year is welcome. High interest rates have always been a hindrance to industrial and business activities.
The business leader said that now that the economic conditions have greatly improved, the business community demands a four percent reduction in interest rates. Still, the central bank is acting cautiously in this regard.
Mian Zahid Hussain said that interest rates in Pakistan are still higher than those in other countries in the region. In the recently bankrupt countries of Sri Lanka, India, and Nepal, interest rates are in single digits, while in Bangladesh, they are ten percent.
However, in Pakistan, the interest rate is still in double digits, and there is still a lot of work to bring it to single digits.
Mian Zahid Hussain said that the economic indicators are currently positive, inflation is down, the current account deficit is positive, and a further reduction in inflation is possible during the current month.
On the other hand, central bank experts believe there is a possibility of problems like fluctuations in commodity prices in the global market, fluctuations in food prices, and efforts to boost revenues.
Mian Zahid Hussain said that according to the current rate of inflation, further reduction in interest rates is possible, which is not being taken advantage of. Bringing the interest rate to a single digit will increase business activities and GDP, which will employ the people and revenue to the government, so the central bank should not exercise unnecessary caution.
Mian Zahid Hussain said that besides reducing interest rates, the government should remove all obstacles in the way of business, ensure law and order, accelerate the process of reforms in the failed government institutions that are making losses, and improve laws.
He noted that these steps will bring economic stability, but without political stability, it will have no significance. Mian Zahid Hussain added that there is a need to pay close attention to key sectors of the economy. In contrast, the agricultural industry should be given priority so that billions of dollars can be spent on importing agricultural products.
Four billion dollars are spent annually on palm oil imports; an alternative should also be found. If the cotton production in the country is as per the requirement, the textile industry can get cheap raw materials. Unfortunately, the area under cotton cultivation and production in Pakistan is continuously decreasing, so the textile industry must depend on imported raw materials, on which billions of dollars must be spent annually.
