Former Minister Urges SBP to Cut Interest by 4% Next Week

Former caretaker federal minister for Commerce and Industries Gohar Ejaz urged for reducing interest rates by 4 percent in the next Monetary Policy meeting. Ejaz who is also Chairman of FPCCI Economic Think Tank stated that the interest rate at 19.5 percent has become positive by 10 percent as year-on-year (YOY) inflation in August 2024 stood at 9.6 percent compared to inflation in August 2023 at 27.4 percent. He said that the past two years were challenging for the country due to the highest inflation in the region, mainly caused by currency devaluations. The exchange rate fell from Rs. 170 to Rs. 280 per dollar. Interest rates were increased from 9 percent to 22 percent. The currency has remained stable at Rs. 280 for the past year. YOY inflation is down to 9.6 percent in August, and the current account deficit is now at a minimum. “We must now focus on achieving economic stability through the facilitation of domestic commerce and export-led growth. The way forward is not through further domestic and external borrowing. We must make Pakistan competitive by bringing electricity tariffs for all consumers down to 9 cents (Rs. 25 per unit) by eliminating taxes and capacity payments on electricity not provided by Independent Power Producers (IPP)”, said Ejaz adding that this will allow all residential, commercial, industrial, and agricultural consumers to contribute to the economy. “We should reduce interest rates by 4% in the next Monetary Policy meeting and aim to bring interest rates down to 9 percent within this year. This will help shift capital from fixed deposits in banks, currently earning 19.5%, back into businesses. By reducing interest rates, budgetary expenses can be decreased by Rs 5 trillion. We must provide relief in taxation to the salaried class and exporters. As the fifth-largest population in the world, we need to invest in human resources and skill development”, he added. “Pakistan has a great future ahead. We must let the economy grow and ensure this journey is a success through strategic planning and development. Finally, we need to develop an economic roadmap for every sector of our economy for the next 10 years and follow through to take our country Pakistan where it belongs”, Ejaz added.