Korangi Association of Trade and Industry (KATI) President Sheikh Umer Rehan has urged the State Bank of Pakistan (SBP) to reduce the policy rate to single digits at the upcoming Monetary Policy Committee (MPC) meeting, arguing that lower borrowing costs are essential to encourage industrialisation, investment and economic growth.
He said high interest rates were increasing financial pressure on manufacturers, raising production costs and discouraging businesses from undertaking new investment projects. Without affordable financing, industries would struggle to expand production capacity, establish manufacturing facilities, create jobs and increase exports.
High Interest Rates Add to Industrial Production Costs
Sheikh Umer Rehan said Pakistan’s industrial sector was already facing multiple cost pressures, including high electricity and gas tariffs, expensive raw materials and a substantial tax burden.
Costly bank financing was adding to these challenges, increasing the overall cost of doing business and weakening the competitiveness of Pakistani products in domestic and international markets.
He stressed that reducing borrowing costs would help industrialists manage working capital requirements, expand operations and make investment decisions with greater confidence.
According to the KATI president, monetary policy should take into account the financial needs of manufacturers, prevailing business costs and investment trends to support productive economic activity.
KATI Calls for Affordable Financing to Boost Investment
Sheikh Umer Rehan said an appropriate reduction in the policy rate could encourage businesses to expand production facilities, adopt modern technologies and establish new manufacturing units.
Lower financing costs could also support employment generation and help businesses improve productivity, strengthening the industrial sector’s contribution to economic growth.
He emphasised that a more supportive monetary environment was particularly important for industries seeking to increase production and compete in export markets.
SMEs Need Easier Access to Credit
The KATI president also highlighted the importance of affordable financing for small and medium-sized enterprises (SMEs), which play a significant role in industrial development, employment generation and economic activity.
He said high borrowing costs could restrict smaller businesses’ ability to invest, manage cash flow and expand their operations.
Improved access to reasonably priced credit, he added, would help SMEs strengthen their businesses, create employment opportunities and contribute more effectively to the national economy.
KATI Appeals to SBP Governor for Single-Digit Policy Rate
Sheikh Umer Rehan appealed to SBP Governor Jameel Ahmad and members of the Monetary Policy Committee to develop a clear strategy for gradually bringing interest rates down to single digits while considering concerns raised by the business community.
He said a reduction in the policy rate would help encourage industrialisation, restore investor confidence and create a more favourable environment for business expansion.
KATI maintains that affordable financing, combined with measures to address energy costs, taxation and other structural challenges, is necessary to strengthen industrial competitiveness and put Pakistan’s economy on a sustainable growth path.