Karachi — The Federation of Pakistan Chambers of Commerce and Industry has strongly rejected the recent policy rate hike by the State Bank of Pakistan, warning that the decision could trigger industrial closures, reduced investment, and economic stagnation.
In a statement issued on April 27, FPCCI President Atif Ikram Sheikh termed the increase in the key policy rate by 1 per cent as “ill-timed and unfortunate,” arguing that Pakistan’s economy was beginning to recover following a period of stabilization.
He reiterated that the apex trade body had previously cautioned against continued monetary tightening, stating that such policies could severely impact already struggling industrial and export sectors. “Pakistan no longer needs contractionary and regressive monetary or fiscal policies,” he said.
According to Atif Ikram Sheikh, high interest rates contradict the government’s stated objectives of economic revival, export growth, and job creation, making Pakistani products less competitive in regional and global markets.
He further criticised the move as a setback for the business community, noting that industries are already burdened with high borrowing costs compared to regional economies with lower interest rates. He argued that inflation in Pakistan is largely driven by energy costs and supply-side inefficiencies rather than demand, and that tighter monetary policy would only increase the cost of doing business.
Senior Vice President Saquib Fayyaz Magoon highlighted the adverse impact on small and medium enterprises (SMEs), warning that the rate hike would restrict access to affordable financing and could push many businesses toward default or closure.
He added that rising energy tariffs and compliance costs, combined with higher borrowing costs, would further strain manufacturers and undermine the country’s revenue targets.
Vice President and Regional Chairman Sindh Abdul Mohamin Khan also expressed concern over the situation in Sindh, stating that many factories are already operating below capacity and may now be forced to lay off workers, halt expansions, and cancel orders.
The FPCCI called on Prime Minister Shehbaz Sharif, the Ministry of Finance, and the SBP leadership to review the current monetary policy stance and adopt a growth-oriented framework. The body urged policymakers to focus on expanding the tax base, reducing energy costs, and easing borrowing conditions to support industrial and export sectors.
The statement concluded with a call for immediate reconsideration of policies that, according to FPCCI, risk undermining economic recovery and industrial productivity.
