Ghangra urges SBP, govt to reduce policy rate to single-digit
He said the current high rate has become one of the biggest obstacles to Pakistan's economic activities, especially in light of rampant inflation, industrial slowdown, and a stagnant business environment. 'This policy rate is paralyzing the pace of national development,' he stated.
Ghangra pointed out that the Government of Pakistan itself is borrowing huge sums from commercial banks and is paying trillions of rupees annually in interest alone. This enormous financial burden on the national exchequer, he noted, could otherwise be utilized for industrial development, economic reforms, and financial support for traders and small businesses.
He added that if the interest rate is reduced to a single-digit level, the country could save trillions of rupees each year savings that could fuel critical economic initiatives.
He further emphasized that unless the interest rate is brought down to a moderate and realistic level, business confidence cannot be restored. 'Entrepreneurs, industrialists, and investors are reluctant to take loans due to prohibitively high borrowing costs,' he said, warning that this leads to economic stagnation and shrinking employment opportunities.
Chairman SITE Zubair Ghangra compared Pakistan's monetary policy to its regional counterparts, stating that countries like Bangladesh, India, and Vietnam have successfully kept their interest rates in single digits to keep their economies moving. 'We must adopt a similar strategy to maintain competitiveness and ensure industrial survival,' he urged.
Concluding his statement, Zubair Ghangra made a strong appeal to the State Bank of Pakistan and the Federal Government to immediately reduce the policy rate to a single-digit level, in line with the economic realities on the ground. 'This is not just a matter of relief for the business community,' he stressed, 'but also an urgent requirement for the government itself, as higher interest payments are expanding the debt cycle and squeezing development expenditures.'
'It is now time to take practical steps toward stabilizing the economy by reducing interest rates to a reasonable level. This will pave the way for increased investment, enhanced exports, job creation, and public relief,' he concluded.
Copyright Business Recorder, 2025
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