Karachi: Mohammad Kamran Arbi, President of the Site Association of Industry Karachi, has publicly criticized the recent modest cut in interest rates by the State Bank of Pakistan as insufficient for supporting industrial growth. He is advocating for further reductions to bring the policy rate down to a single digit, aiming to decrease production costs and enhance competitiveness in global markets.

According to S.I.T.E Association of Industry, Arbi emphasized in a statement issued on Monday the need for a single-digit policy rate, which was also proposed in the budget submissions by the SITE Association. He highlighted the disproportionate borrowing rates in the country, with the government accounting for 80% of borrowing and the private sector only 20% to 22%. Arbi argued that a 2% cut in the policy rate could free up approximately PKR 650 billion in fiscal space, offering more room for government and private sector activities.

Arbi further critiqued the recent minimal adjustments in monetary policy, expressing disappointment and calling for significant reductions to address the high costs burdening producers. He pointed out that the global business environment is evolving towards lower interest rates, which facilitate increased economic activity, suggesting that Pakistan should follow suit.

The industrial leader also underscored the negative impact of high-cost loans on industries' ability to operate effectively and compete internationally. He urged the central bank to take bold steps in its next policy announcement to reduce interest rates to single digits, a move he believes would boost the economy and markedly improve the country's export performance.