KARACHI: President of the Site Association of Industry (SAI) Abdul Rehman Fudda has voiced disappointment over the State Bank of Pakistan’s (SBP) decision to keep the policy rate unchanged at 10.5 per cent, warning that the move could further strain industrial activity and exports.
In a statement, the SAI president said the business community had hoped for a reduction in the policy rate to ease financial pressure on manufacturers. However, maintaining a relatively high interest rate, he said, would make borrowing costly for businesses and discourage investment in the industrial sector.
He pointed out that industries were already facing rising production costs due to expensive electricity and gas, leaving little room for expansion. “Under these circumstances, keeping borrowing costs high makes it even more difficult for industries to expand operations or increase output,” he said.
Fudda noted that central bank officials had themselves acknowledged a decline in exports alongside an increase in imports, which he described as a sign of slowing economic activity. Given the situation, he said, a cut of at least one to one-and-a-half percentage points in the policy rate would have provided some relief to the business community and encouraged investment.
He added that bringing the policy rate down to single digits could have helped exporters obtain cheaper financing from banks, enabling them to expand production and compete more effectively in international markets. Such a move, he said, would also support economic growth by boosting industrial output and exports.
The SAI president urged the government and the central bank to consider the challenges faced by the industrial and export sectors when making future monetary policy decisions, stressing that supportive policies were essential for economic stability and growth.
