Gohar Ejaz seeks major interest rate cut
He pointed out that the country's 11% policy rate against a 3.2% inflation rate results in a punitive real interest rate of 7.8%, nearly double India's 3.4% and over five times China's 1.4%.
In a post on X, Dr Ejaz, who also chairs the Economic Policy & Business Development Think Tank, compared regional economic conditions, noting that Pakistani businesses are paying double the financing costs of their regional counterparts while also facing electricity rates of 12-14 cents per kWh, compared to 59 cents in neighbouring countries.
"Pakistani businesses pay double regional financing costs while facing electricity at 12-14 cents/kWh versus 5-9 cents regionally," Dr Ejaz wrote in a post on X.
Meanwhile, he highlighted, unemployment in Pakistan stands at a staggering 22%, in contrast to 4.2% in India and 4.57% in China.
Referring to the country's previous macroeconomic volatility, he wrote: "The 2022 boom-bust cycle with $17.5 billion current account deficit was not caused by low interest rates but by $3 billion vaccine imports and $12 billion in higher oil and gas payments due to Ukraine war-induced global energy price spikesfactors completely unrelated to domestic interest rates."
Dr Ejaz argued that fiscal and monetary policies appear to be working at cross purposes. "FBR targets 18% revenue increase while monetary policy suppresses the business activity generating taxes. State Bank reserves rose $5.4 billion to reach $14.46 billion (as of 18th July 2025) through borrowingnot exports or productive growth." Calling for urgent reforms, he suggested cutting the policy rate to 9% immediately and to 6% by 31st December 2025.
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