LAHORE: The Pakistan Business Forum (PBF) urged the authorities concerned to ensure a significant cut in markup rate to bolster economy and enhance productivity.
PBF Lahore President Momin Ali Malik told the media here that with decline in the inflation and improvement in external account, the businessmen were expecting a significant cut in the monetary policy framework in the next meeting of Monetary Policy Committee. He argued that tight monetary policy was hurting the economy, so the markup rate would have to be brought down to a single digit. Malik suggested that the government should focus on local as well as foreign investors, and aboard all stakeholders in policy making, besides resolving the genuine problem of the business community. It would definitely ensure economic turnaround in the country, he added.
The president said if the interest rate was reduced considerably, it would boost sustainable economic activities.
He expected a reduction of 250bps in the policy rate, potentially lowering it to 20 per cent. The forecast was underpinned by several favourable economic indicators, suggesting a conducive environment for initiation of reversal in monetary stance, he added.
Momin Ali Malik said that the anticipated rate cut would not only support economic growth but also align with the evolving economic conditions. He said that one of the primary factors supporting the expectation of a rate cut was the downward trajectory of Pakistan’s inflation. Both headline and core inflation figures had shown significant improvement.
The PBF president said the average headline inflation for the first 10 months of current fiscal year had decreased to 25.97 per cent, down from 28.23 per cent during the corresponding period last FY adding on the external front, the current account deficit had shown remarkable improvement during the first 10 months of this fiscal year, narrowing by 95 per cent to $202 million, and the significant reduction had contributed to the stability of the rupee against the dollar.
Malik suggested a considerable reduction in the key policy rate, taking it into single digit, with a view to providing the private sector access to low-cost borrowing.
He called for a reduction in the energy prices for the local industry to stimulate industrial growth further. He also called for ease of doing business, lowering cost of production, a solution to the liquidity crunch through early refund payments, a long-term and consistent energy tariff policy, and a relaxed import policy for industrial raw materials so that industrialization could be promoted and exports could be enhanced.
