Karachi: Leaders of the United Business Group (UBG) have called for an immediate additional 3% reduction in the interest rate by the State Bank of Pakistan (SBP), urging that rates be brought down to single digits to alleviate the financial strain on businesses across the country. The group criticized the recent 2% cut as insufficient given the current economic challenges, including high business costs and energy tariffs.

According to United Business Group, the business community is grappling with severe financial challenges exacerbated by a liquidity crunch. UBG President Zubair Tufail, along with other prominent members like Chairman of Sindh Region Khalid Tawab and Secretary General Hanif Gohar, argued that while the SBP’s recent 2% reduction offers some relief, it falls short of the significant 5% cut that had been anticipated by traders, exporters, importers, and small businesses. They noted that despite the decrease in inflation to single digits, the policy rate remains excessively high, not aligning with the lower inflation rates.

UBG leaders emphasized that the existing monetary policy carries a heavy premium over core inflation, which is detrimental to the competitiveness of Pakistani businesses on both regional and international stages. With core inflation expected to be around 8.0% in September 2024 and global oil prices reaching a three-year low, the group sees no reason for the SBP to delay a substantial rate cut. They recommend lowering the interest rate to 12% immediately, which they believe would significantly reduce the cost of capital for exporters and enhance their competitive edge globally.