ISLAMABAD : As State Bank of Pakistan (SBP) is going to review its policy rate on July 30, the key stakeholders of the economy are demanding major cut in interest rate to help revive industries and ease business doing in Pakistan.
All Pakistan Currency Exchange Dealers Association (APCEDA) president, Malik Bostan Khan, strongly demands considerable cut in the policy rate. Talking to NEWSMAN by phone from Karachi, Malik Bostan Khan said SBP must bring down the policy rate to single digit to help businesses and industries revive and play a much-needed role in overcoming challenges confronted with the national like depending on loans and seeking donors’ help to meet development expenditures.
Malik Bostan Khan had raised the issue of high interest rates in Pakistan during a meeting held with a senior official of the Inter Services Intelligence (ISI last week.
The Pakistan Federation of Chambers and Industry (FPCCI), All Pakistan Textile Manufacturers Association (APTMA) and many other trade organisations are also demanding cut in the policy rate to 6 percent.
If one goes through the recent history, SBP has simply ignored repeated calls of trade organisations for making real downward adjustment in the policy rate. The independent economists are disappointed over SBP’s policy of not adjusting the policy rate in line with declining inflation.
The official statistics suggest that inflation is hovering around 4 percent in the last around three to four months and on the calculations of this number SBP should have cut down the policy rate to 6 percent. But the central bank is keeping the policy rate in the double digits for many months now . This policy is not only harming the public at large due to continuous upward trend in the price-hike, but also discouraging doing business , besides damaging the government efforts aimed at revival of Pakistan’s industries.
Think Tank in Islamabad also called for rationalisation of the policy rate.
SBP’s policy of pushing the policy rate up to 22 percent and keep it at this alarming level for years, exposed Pakistan’s economy to the risk of default. It brought the businesses and industrial activity to a grinding halt. There was literally no industrial activity in Pakistan from 2019 to 2024 due to killing policy rate. The SBP kept on playing a dirty game by jacking up the policy rate as high as 22 percent without considering its impact on national economy. Unbearable policy rate was, in fact, meant to give undue benefit to the banking sector. The SBP policy was working in favour of the banks which grabbed trillions through loans given to the government. The private sector remains out of the loan borrowing if the policy rate remains as high 22 percent.
SBP, unfortunately, helped the banks to make trillions in high policy rate regime. This policy added hundreds of trillions onto Pakistan’s domestic loans. SBP might have carried out the same policy of dolling out trillions to the banks even today had it not questioned by some intelligence officials.
NEWSMAN has credible information that intelligence officials summoned SBP top man as well as the banks chief executives to Islamabad in 2024 to seek justification of jacking up the policy rate to 22 percent. These sources say the intelligence officials placed banks’ profits sheets between 2019 and 2024 and issue strict wanting to SBP and the banks chief executives and asked them to stop this dirty game of making unjustified profit through monstrous policy rate.
This warning of the intelligence officials worked to some extent and SBP rationalized the policy rate to 11 percent in different phases last year, but since interests are bigger than the national interest for the banking mafia , SBP is again keeping the policy rate at 11 percent for many months. SBP top management is again playing the same dirty game of favouring the banking sector to make money rather than looking after the national interest. SBP is again being demanded by different stakeholders for cutting down the policy rate to 6 percent. The cut in the policy rate is a must to revive industrial activities and doing businesses . Let us see SBP cuts down the policy rate as per demand of the stakeholders or opt to look after the interest of the banking sector when its committee meets tomorrow for review of the policy rate.
