UBG President Criticizes 11% Interest Rate Policy
UBG President Zubair Tufail has expressed serious concern over the State Bank of Pakistan’s decision to maintain the policy interest rate at 11 percent, describing it as a major setback for industrial and economic growth in Pakistan.
Speaking on Tuesday, the UBG President said the business community has long demanded that the interest rate be reduced to single digits to stimulate investment and improve industrial productivity. However, he said that demand has been ignored despite stable inflation and economic slowdown.
“The rate has been maintained contrary to ground realities, which has created deep concern among business circles,”
said Zubair Tufail.
Call for Reduction in Interest Rate
The UBG President pointed out that with inflation largely under control, the State Bank should have reduced the rate by at least 2 to 3 percent. He termed the decision to maintain the rate at 11% “unbelievable” given the current economic challenges.
“If the Monetary Policy Committee found it difficult to reduce the rate by two or three percent, it should have at least announced a one percent cut to support industrial growth and job creation,” Tufail added.
He said that keeping the interest rate high will continue to discourage borrowing, delay industrial expansion, and restrict exports.
Impact on Industry and Employment
Zubair Tufail warned that industries are already under immense strain due to unbearably high electricity and gas tariffs, which have drastically increased the cost of doing business.
“The private sector can no longer sustain the burden of expensive borrowing,”
the UBG President warned, adding that industrial progress will slow down, and new investment will decline further if monetary relief is not provided.
He urged the State Bank of Pakistan to review its monetary stance in the next policy announcement, aligning it with the ground realities of Pakistan’s industrial sector.
Economic Outlook
The UBG President emphasized that Pakistan needs a pro-industry interest rate policy to drive economic revival and create employment opportunities. He called on policymakers to learn from regional economies, which maintain lower interest rates to support industrial competitiveness and exports.
“Maintaining high rates may control inflation temporarily, but it weakens production, investment, and employment,” he concluded.
