United Business Group demands cut in policy rate by 500 bps

LAHORE: Patron-in-Chief United Business Group (UBG) S M Tanveer has demanded an immediate reduction of 500 basis points in the policy rate, as inflation has dropped to 6.9% From 38%.

He further proposed to bring the policy rate to 8 percent by the month of January 2025, saying that ease of doing business has become the need of the hour because of the overall improvement in the economic indicators.

He said a comparison of Pakistan’s macroeconomic indicators between June 2023 and September 2024 suggests significant economic improvements, leading to the approval of the IMF package from its Executive board.

Tanveer said the statistics demonstrate notable economic growth and stability and speak volumes about the efforts put in both by the government of Prime Minister Shehbaz Sharif and the establishment of the Special Investment Facilitation Council (SIFC).

However, he cautioned in the same breath that more efforts are required to operationalize the closed business activities through a single-digit interest rate and energy tariff.

He added that both the economic indicators and the IMF package are enough to raise a demand that the government should ensure a business-friendly environment and let business and exports grow to promote investment and employment in the country.

It may be noted that the economic data suggests that the GDP has grown from 0.29% to 2.38% during the period and the projected growth for 2025 is 3.9%.

Similarly, the trade deficit has reduced from $27.47 billion to $24.09 billion, and the current account deficit from $2.55 billion to -$0.68 billion. While the exports have surged from $27.7 billion to $30.6 billion. Especially, the agricultural exports have increased from $4.7 billion to $7.1 billion during the period.

In addition, Information Technology (IT) exports surged from $2.6 billion to $3.2 billion, remittances from $27.3 billion to $30.2 billion, and foreign direct investment from $1.63 billion to $1.9 billion during the last one year.

It may further be noted that the inflation reduced from 38% to 9.6%, the policy interest rate from 22% to 17.5% and the rupee value improved from Rs333.5 to Rs278 per dollar from June 2023 to September 2024.