UBG patron-in-chief demands cut in policy rate by 500 bps

Patron-in-Chief of the United Business Group (UBG), SM Tanveer has demanded an immediate reduction of 500 basis points in policy rate, as inflation has dropped to 6.9%.

He further proposed to bring the policy rate to 8% by January 2025, saying that ease of doing business has become need of the hour because of the overall improvement in the economic indicators.

He said a comparison of Pakistan's macroeconomic indicators between June 2023 and September 2024 suggests significant economic improvements, leading to the approval of the International Monetary Fund (IMF) package from its Executive board. 

Tanveer said the statistics demonstrate notable economic growth and stability, and speak volumes about the efforts put in both by the government of Prime Minister Shehbaz Sharif and the establishment of Special Investment Facilitation Council (SIFC). 

However, he cautioned in the same breath that more efforts are required to operationalise the closed business activities through a single digit interest rate and energy tariff. 

He added that both the economic indicators and the IMF package are enough to raise a demand that the government should ensure a business-friendly environment and let the business and exports grow to promote investment and employment in the country. 

It may be noted that the economic data suggests that the GDP has grown from 0.29% to 2.38% during the period and the projected growth for 2025 is 3.9%.

Similarly, the trade deficit has reduced from $27.47 billion to $24.09 billion and the current account deficit from $2.55 billion to -$0.68 billion.
While, the exports have surged from $27.7 billion to $30.6 billion. 
Especially, the agricultural exports have increased from $4.7 billion to $7.1 billion during the period.

In addition, Information Technology exports surged from $2.6 billion to $3.2 billion, remittances from $27.3 billion to $30.2 billion and foreign direct investment from $1.63 billion to $1.9 billion during the last one year.

It may further be noted that the inflation reduced from 38% to 9.6%, policy interest rate from 22% to 17.5% and rupee value improved from Rs333.5 to Rs278 per dollar from June 2023 to September 2024.