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 Thursday that the fourth reduction in interest rates since June is welcome. However, he said the move fell short of the business community’s expectations. Mian Zahid Hussain said the interest rate should have been reduced to 5% instead of 2.5% to encourage the private sector. Still, this time, the central bank again acted with unnecessary caution.
Talking to the business community, the veteran business leader said that the country’s economy has come out of danger. Apart from IPPs, tax issues, and energy prices, many serious problems are being solved, and indicators are rapidly improving.
He observed that the rupee’s value against the dollar has been stable for a year and a half due to the control of dollar smuggling and exchange companies, but the central bank’s caution remains beyond comprehension.
Mian Zahid Hussain said that according to the central bank, inflation is decreasing faster than expected. Many economic critics believe that this is more a result of the people’s reduced purchasing power than government measures, but this idea is not correct.
He noted that a seven percent reduction in interest rates over four months is positive but still too high compared to neighbouring countries.
If inflation is in the single digits, the interest rate needs to be reduced by the same ratio so that economic affairs improve, businesses can run, and people can get jobs.
Mian Zahid Hussain said that as long as the interest rate remains high, the private sector cannot take loans, resulting in reduced production, exports, employment, and revenue.
At present, he said, no comparison is possible between government loans and private sector loans. In the last financial year, the private sector took only Rs 106 billion from banks, while the federal government took Rs 8564 billion.
Unless the government reduces borrowing from local banks, the private sector will not be able to grow as banks also prefer to lend to the government.
Mian Zahid Hussain further said that the decrease in inflation is visible in the data, while nothing is becoming cheaper due to market profiteering, which is unfortunate.
Consumer goods continue to be expensive, with prices skyrocketing for many items and testing the patience of people with low incomes.
He said that per capita income in the country has decreased compared to last year. The people are facing the wrath of inflation, and something should be done to relieve the masses so that the country can progress in real terms.
