NKATI President Warns 12% Policy Rate Will Deepen Industrial Challenges

Faisal Moez Khan says higher borrowing costs could discourage investment, weaken exports and put additional pressure on businesses.

North Karachi Association of Trade and Industry (NKATI) President Faisal Moez Khan has criticised the State Bank of Pakistan’s decision to raise the policy rate by 50 basis points to 12 per cent, warning that the move could increase pressure on industries and slow economic growth.

Higher Interest Rates Could Weaken Economic Stability

He said the increase would undermine ongoing efforts to achieve economic stability. It could also weaken Pakistan’s export competitiveness and make it harder for local manufacturers to compete in international markets.

Regional Competitiveness at Risk

According to Khan, the higher policy rate would put Pakistan’s economy at a disadvantage compared with regional competitors. He argued that businesses need affordable financing and targeted economic incentives rather than higher borrowing costs.

He urged policymakers to support domestic production, sustain business activities and encourage companies to create new employment opportunities.

Rising Borrowing Costs May Hurt Industrial Growth

Khan also questioned whether higher interest rates would effectively address price pressures under the prevailing economic conditions. He said the decision would add to the financial burden on manufacturing industries and could force some formal businesses to reduce operations or shut down.

Furthermore, he warned that expensive borrowing could discourage new investments and delay industrial expansion. Higher financing costs could also restrict productive activities and limit businesses’ ability to grow.

Affordable Credit Needed to Boost Exports and Employment

The NKATI president stressed that access to low-cost credit remains important for industrial development, export growth and employment generation. He called for policies that support businesses while helping the country maintain economic stability.

Higher Interest Rates Could Increase Government Debt Burden

Khan also warned that higher interest rates could increase the government’s debt-servicing burden, adding further pressure to the economy.