The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) today vehemently condemned the State Bank of Pakistan”s (SBP) recent one percent increase in the key policy rate, with Senior Vice President Saquib Fayyaz Magoon terming the decision “severely damaging” for the nation”s economy and the business sector, and demanding an immediate reversal.
Mr Magoon, who also chairs the Businessmen Panel-Progressive (BMPP), articulated a sharp reaction, stating that the monetary tightening ran counter to the business community”s expectations and persistent calls for either a reduction or a maintenance of the interest rate to foster economic expansion.
He highlighted the immense pressure on Pakistani exporters already contending with fierce global market competition. Such policy adjustments, he explained, elevate the cost of conducting business, causing a two to four percent surge in production and export expenses, thus undermining the competitiveness of local products.
Given the prevailing national challenges of high inflation, escalating fuel prices, and an uncertain global economic landscape, Mr Magoon asserted that the government should have refrained from this particular decision.
He further suggested that with an anticipated decline in global oil prices, inflationary pressures would naturally ease, rendering a rate hike at this juncture both premature and ill-advised.
A more prudent approach, he proposed, would have been to defer this increment until the subsequent monetary policy committee meeting to allow for a comprehensive assessment of the evolving economic circumstances.
Emphasising the severe financial strain already burdening the business community, Mr Magoon cautioned that such moves not only erode investor confidence but also directly impair the nation”s export performance.
He reiterated his appeal to the government to urgently review and rescind the one percent interest rate increase, particularly if global negotiations yield favourable outcomes and economic conditions improve.
He ultimately urged policymakers to prioritise the difficulties encountered by enterprises and strive towards lowering the interest rate to help Pakistan maintain its critical competitive advantage in international trade.