Karachi, December 16, 2024 – The SITE Association of Industry has rejected the State Bank of Pakistan’s (SBP) recent monetary policy decision, stating that the 200-basis-point reduction in the policy rate will have no meaningful impact on the economy or industrial growth.
SITE Association President Ahmed Azeem Alvi expressed disappointment over the SBP’s decision to lower the interest rate from 15% to 13%, calling it insufficient to address the challenges faced by the business community. Alvi reiterated the association’s demand for a more substantial 500-basis-point (5%) reduction to bring the rate into single digits.
In a statement, Alvi emphasized that the continuous decline in inflation—currently at 4.9%—provides a clear rationale for more aggressive monetary easing. “Bringing the interest rate down to 13% is not enough to stimulate significant economic activity or industrial growth,” he said. “A single-digit interest rate is critical to accelerating borrowing from banks, expanding existing industries, and encouraging the establishment of new ones.”
Alvi criticized the government for what he termed contradictory policies. “On one hand, the government is promoting business expansion and the creation of new industries, but on the other, it has failed to take serious steps to reduce the cost of doing business,” he said. “High interest rates, expensive electricity and gas, and excessive taxation are making it nearly impossible for businesses to survive, let alone thrive.”
The SITE Association president also called for greater engagement with stakeholders in policymaking. “To truly set Pakistan on a path to sustainable economic growth, the government must adopt industry-friendly measures and actively consult with the business community,” he stated. “Restoring the confidence of industrialists is key to unlocking their potential contributions to the economy.”
Alvi further proposed a more dynamic approach to monetary policy. He urged the SBP to hold Monetary Policy Committee meetings every 15 days to respond swiftly to evolving economic conditions. “Reducing the interest rate to single digits will not only boost industrial activity but also generate vast employment opportunities through the establishment of new industries,” he concluded.
The SITE Association reaffirmed its commitment to advocating for policies that foster industrial growth and economic prosperity in Pakistan.