KARACHI: President of the Pakistan Businessmen and Intellectuals Forum (PBIF) and All Karachi Industrial Alliance, Mian Zahid Hussain, has voiced concerns over the State Bank of Pakistan's recent decision to increase the policy rate by 50 basis points, from 11.5 percent to 12 percent. He warned that this move could exacerbate financial pressures on industries, exporters, and small businesses, which are already grappling with rising operational costs.

According to Pakistan Businessmen and Intellectuals Forum, Hussain emphasized the importance of controlling inflation while ensuring that industrial productivity remains a priority. He pointed out that the current inflation rate stands at 10.3 percent, with core inflation at approximately 8.4 percent. The State Bank aims to reduce inflation to a medium-term target of 5-7 percent. However, Hussain argued that the recent increase in the policy rate might undermine productive recovery, as the rising costs of energy, driven by geopolitical tensions and domestic supply issues, continue to strain the economy.

Hussain highlighted the adverse effects of higher borrowing costs on exporters, noting that while export growth showed an 18.49-percent year-on-year increase in September, it still lagged behind import growth. He stressed the need for strengthening the financial resources and competitiveness of exporters, particularly those who do not benefit from concessional financing rates. Hussain urged the government to expand access to concessional financing and expedite the release of sales tax and income tax refunds to alleviate the financial burden on businesses.

Small businesses, according to Hussain, are particularly vulnerable to the increased financing costs due to their limited capital base. The rise in borrowing costs could delay critical business decisions and reduce fiscal space for developmental and social sectors. Hussain called for coordinated efforts between the government, the State Bank, and other stakeholders to maintain inflation control while supporting industrial recovery and employment growth.