KARACHI: Faisal Moiz Khan, President of the North Karachi Association of Trade and Industry (NKATI), has criticized the State Bank of Pakistan's recent decision to raise the policy rate by one percentage point. He cautioned that this move could severely hamper industrial growth at a time when the country's manufacturing sector is facing significant challenges.
According to North Karachi Association of Trade and Industry, Khan stated that the rate increase would lead to higher financing costs, thereby escalating the cost of doing business and making it difficult for industrialists to maintain their operations. He emphasized that industrialists are already dealing with high production costs and inflation, and the rate hike will exacerbate these issues.
Khan highlighted the concern that regional economies operate with single-digit interest rates, while Pakistan imposes double-digit borrowing costs on its industry. He warned that this disparity is diminishing Pakistan's industrial competitiveness and discouraging investors at a critical time.
He expressed worries about the impact on small and medium-sized enterprises (SMEs), which he described as the backbone of Pakistan's economy. With the policy rate now increased, SMEs may find it even harder to access affordable credit, potentially harming the national economy.
Khan also noted the broader global context, including rising tensions between the United States and Iran, which have already stressed regional economies. He mentioned that the business community had hoped for stable rates from the State Bank, or even a cut, given these challenges. The rate hike, he said, contradicted industry expectations.
Khan pointed out that the export sector, crucial for foreign exchange earnings and economic stability, needed relief but did not receive it. He urged both the government and the State Bank of Pakistan to reverse the rate hike and reduce petroleum prices to support industrial operations, protect jobs, and foster economic growth.
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