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SAI Chief Criticizes 2% Interest Rate Cut, Calls for 5% Reduction to Boost Economy

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KARACHI, December 16, 2024: Ahmed Azeem Alvi, President of the SITE Association of Industry Karachi, has voiced his disappointment over the State Bank of Pakistan’s decision to reduce interest rates by just 200 basis points (2%). Despite widespread requests from the business community, he insists that a reduction of 500 basis points (5%) is necessary to effectively stimulate the economy.

Alvi emphasized that while inflation is steadily decreasing, reducing the interest rate to just 13% will not have a significant positive impact on the economy or the industrial sector. He argued that a strategy to bring the interest rate into single digits would not only accelerate economic activities but also increase bank borrowing, foster industrial growth, and support the establishment of new industries.

In his statement, Alvi pointed out the contradiction between the government’s push for business expansion and the lack of concrete steps to reduce business costs. He cited high interest rates, expensive utilities, and various taxes as barriers to setting up and maintaining industries. “If the government is serious about economic development, it must adopt industry-friendly measures and engage with stakeholders to restore confidence in the industrial sector,” he added.

The SAI President also reiterated his long-standing demand for more frequent meetings of the Monetary Policy Committee, suggesting that with inflation continuing to decline, the central bank should meet every 15 days to discuss further interest rate cuts. He stressed that reducing the interest rate to single digits would be welcomed by the business community and generate significant employment opportunities through the creation of new industries.

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