FPCCI President Atif Ikram Sheikh warns higher borrowing costs will undermine industrial growth, export competitiveness and private-sector investment.
KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly criticised the State Bank of Pakistan’s (SBP) decision to raise the policy rate by 50 basis points to 12 per cent, urging authorities to reduce interest rates to single digits.
FPCCI President Atif Ikram Sheikh described the monetary tightening as counterproductive, warning that higher borrowing costs could undermine economic stabilisation, industrial expansion and Pakistan’s export competitiveness.
He said businesses were already facing high utility tariffs, rising operating expenses and liquidity constraints. Increasing financing costs further would discourage investment, restrict domestic production and threaten employment opportunities.
Sheikh argued that Pakistan’s inflation was being driven largely by supply-side constraints, elevated energy costs and fiscal issues rather than excessive demand. He maintained that higher interest rates could penalise productive industries without adequately addressing these underlying inflationary pressures.
According to the FPCCI chief, sustained high borrowing costs have made financing increasingly difficult for manufacturers, commercial enterprises and small and medium-sized enterprises (SMEs).
He warned that businesses require affordable credit to upgrade technology, increase value addition, expand production and compete with regional exporters operating in different financing conditions.
Sheikh also highlighted the burden of high interest rates on government debt servicing and private-sector borrowers, saying expensive financing could contribute to fiscal pressure and sluggish economic growth.
The FPCCI has called on the federal government, the SBP and economic policymakers to reconsider the monetary policy framework and bring the policy rate down to single digits.
Sheikh stressed that Pakistan needed a pro-growth approach aligned with regional interest-rate benchmarks. He also urged authorities to institutionalise consultations with the business community before introducing monetary measures affecting industrial activity and national economic output.