Industry leaders and business groups in Pakistan have urged the State Bank of Pakistan (SBP) to reduce the policy interest rate to between 5 and 6 percent. They made the demand ahead of the upcoming Monetary Policy Committee (MPC) meeting to align Pakistan’s borrowing costs with regional economies and ease rising business expenses.
Karachi Chamber of Commerce and Industry (KCCI) President Javed Balwani highlighted that Pakistan’s lending costs are the highest in the region, hurting business growth. He compared regional interest rates, noting Vietnam at 6.3%, Cambodia 3%, Indonesia 6%, and India 5.5%. Balwani also pointed out that high energy prices—Pakistan’s electricity costs nearly 16 cents per unit compared to just 5 to 9 cents in neighboring countries—worsen the country’s competitiveness.
He said lowering interest rates to 5-6% would provide significant relief to businesses, especially small and medium enterprises (SMEs), which suffer from high financing costs. Balwani stressed that over 75% of domestic loans go to the government, leaving just 25% for the private sector, a problem that a smart monetary policy could address.
Other business leaders, including officials from the Korangi Association of Trade and Industry (KATI), FPCCI, NKAATI, and FATAI, echoed the call for single-digit interest rates to stimulate industrial growth and reduce the financial burden on manufacturers. United Business Group’s Zubair Tufail called for an even steeper cut of 4-5% to revive the economy.
In contrast, Lasbela Chamber of Commerce and Industry President Yaqoob H. Kareem suggested an immediate cut to 9% at the upcoming meeting, aiming for a long-term target of 5% by the end of 2025 to support sustainable economic growth.