Pak Mills Assn calls for point cut in interest rates to boost textile exports
Oct 25, 2024
Lahore [Pakistan], October 25, : Amid the ongoing inflation in Pakistan, All Pakistan Textile Mills Association has demanded a reduction in interest rates to enhance textile exports.
According to ARY News, Kamran Arshad Chairperson of APTMA has called for a 400 basis point reduction in interest rates to enhance textile exports.
He emphasized that the current effective interest rate of 10.6 per cent is detrimental to the industry's growth. Arshad pointed out that despite inflation dropping to 6.9 per cent, the interest rate remains at 17.5 per cent, posing serious challenges for the sector, ARY News.
He argued that an immediate decrease in interest rates is vital for economic recovery and job creation, as the high borrowing costs threaten the stability of the textile industry. Lower interest rates, he asserted, are essential for fostering economic revival and generating employment opportunities.
The report further stated that Finance Minister Muhammad Aurangzeb suggested on Wednesday that the State Bank of Pakistan (SBP) may consider lowering the interest rate further in its upcoming Monetary Policy meeting in November.
He noted that the SBP has already reduced its benchmark interest rate by 450 basis points over the last three meetings, bringing it down from a high of 22 per cent to 17.5 per cent.
In an interview with Bloomberg during the International Monetary Fund meeting in Washington, Aurangzeb mentioned that the next meeting on November 4 could lead to another policy rate cut. He also stated that the current government is actively working to increase the share of taxes in the economy to 135 per cent.
Currently, the interest rate in Pakistan stands at around 17.5 per cent, following a series of cuts by the SBP in response to economic conditions.
The SBP's adjustments aimed to support economic growth while controlling inflation. Since becoming a member of the IMF in 1950, Pakistan has availed itself of 25 IMF programs, with the most recent being a 37-month Extended Fund Facility (EFF) approved in September 2024.
This new USD 7 billion loan marks Pakistan's 25th IMF program since independence in 1947, the highest number of any country, according to Voice of America.
