LAHORE: The Pakistan International Business Forum (PIBF) on Wednesday expressed strong concerns over the decision to maintain the status quo in the monetary policy and not reduce the policy rate, stating that the move has gone against the expectations of the country’s business community.
In a statement, the forum’s President Muhammad Ejaz Tanveer, Secretary General Malik Mahmood, Chief Organizer Maaz Qazi and Coordinator R&D Tahir Mavia said that the business community had clearly demanded a 3.5 percent reduction in the policy rate, but these concerns were not addressed by the government and the monetary authorities.
“The business community has serious reservations over the continuation of the existing monetary policy and the decision not to cut the policy rate. Despite making a clear demand for a 3.5 percent reduction in interest rates, the concerns of stakeholders were ignored,” the statement said.
The PIBF pointed out that inflation has remained around five percent for the past several months, making it unjustifiable to keep interest rates in double digits under prevailing economic conditions.
The forum warned that a prolonged tight monetary stance would further slow industrial activity, discourage private-sector investment, and undermine economic recovery.
Stressing the need for an immediate correction, the PIBF said that achieving export targets, ensuring the smooth functioning of industrial activity, and maintaining stability in the rupee-dollar exchange rate are not possible without a substantial reduction in borrowing costs.
“If export targets are to be achieved, industrial activity is to continue smoothly, and the exchange rate is to remain stable, the interest rate must be brought down to seven per cent immediately under the current circumstances,” the statement concluded.
The Pakistan International Business Forum urged the government and the State Bank of Pakistan to align monetary policy with on-ground economic realities and adopt a growth-supportive approach to revive business confidence and economic activity.
