KARACHI: Chairman of the Businessmen Panel Progressive (BMPP) and Senior Vice President of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI), has urged the government to reduce the policy rate to single digits in light of declining inflation, stating that high financing and energy costs are severely damaging industrial activity and exports.
In a statement, Saqib Fayyaz Magoon said that inflation had already come down significantly and had entered the single-digit range, a development that was widely anticipated.
He said that the government should take advantage of the improving inflation outlook to provide immediate relief to the business community by reducing the cost of finance. He noted that the cost of doing business in the country had reached an unsustainable level, putting immense pressure on industry and trade.
He was of the view that the government had the fiscal space to lower financial costs, adding that a reduction in the policy rate had become easier now that inflationary pressures had eased. He stressed that the policy rate should be brought down to single digits without delay and called for a cut of at least 100bps, which he described as a long-standing demand of the business community.
Highlighting the impact of energy prices, he said electricity tariffs in Pakistan were already among the highest in the region, leading to a sharp increase in production costs. He added that high power tariffs combined with elevated interest rates were eroding the competitiveness of local products in international markets, directly affecting exports.
Saqib Fayyaz Magoon said that if the government was serious about boosting exports and making Pakistani products competitive globally, it would have to reduce the cost of finance. A cut in the policy rate, he added, would support industrial growth, encourage investment and contribute to overall economic stability.
