KARACHI, October 24 2024: The All Pakistan Textile Mills Association (APTMA) is calling on the Monetary Policy Committee (MPC) to reduce interest rates by at least 400 basis points in its upcoming meeting on November 4, 2024. In light of the current economic climate, APTMA emphasizes that immediate action is necessary to alleviate financial pressures on the industrial sector.
Kamran Arshad, Chairman of APTMA, highlighted that with inflation recorded at 6.9% in September 2024, the real interest rate stands at a staggering 10.6%. This level is deemed unsustainable given the prevailing economic conditions. He urged the MPC to realign its monetary policy to reflect the ongoing economic realities and provide relief to struggling industries.
Recent data from the Pakistan Bureau of Statistics (PBS) indicates a steady decline in inflation, dropping from 11.1% in July 2024 to 6.9% in August 2024. Despite this decline, the MPC has been slow to adjust interest rates, resulting in high real interest rates that are hindering economic activity, particularly for industries reliant on accessible capital.
The textile sector, a cornerstone of Pakistan’s economy, has faced soaring borrowing costs over the past two years, leading to significant liquidity constraints. The lack of affordable financing is preventing businesses from securing necessary working capital and making essential investments, jeopardizing not only export potential but also the livelihoods of millions of workers.
APTMA stresses that the current monetary policy stance is misaligned with efforts to stimulate economic growth. With inflation significantly down, there is strong justification for a substantial reduction in interest rates. Such a move would relieve financial pressures, drive investment, enhance productivity, and create jobs.
In light of these challenges, APTMA urges the MPC to take decisive action by cutting interest rates by at least 400 basis points. This reduction is critical for revitalizing the economy, creating fiscal space for public expenditures, and ensuring the survival and growth of vital industries.
APTMA calls on the MPC to recognize the urgency of the situation and act in the best interest of Pakistan’s economic future. A significant cut in interest rates is not merely a preference; it is a necessity for achieving economic stability and growth in the nation.
