ISLAMABAD: In a bid to ease financial pressures on the industrial sector, the Pakistan Textile Mills Association (APTMA) has urged the Monetary Policy Committee (MPC) to cut interest rates by at least 400 basis points in its next meeting on November 4. .
Asking the MPC to reduce the discount rate, which now stands at 17.5%, APTMA Chairman Kamran Arshad stressed in a statement on Thursday that the export business was very concerned about the ever-high interest rates, News I mentioned.
Arshad added that the real interest rate was at an unsustainable level of 10.6% with inflation at 6.9% as of September 2024. He stressed that in order to provide the much-needed assistance to the industrial sector, monetary policy must be adjusted to reflect the state of the economy.
“Inflation has been declining steadily since November 2023,” the APTMA president stated. “It is important that the MPC realigns its policy to reflect these changes and support the struggling industrial sector.”
Arshad stated that according to the Pakistan Bureau of Statistics (PBS), inflation fell to 11.1% in July 2024 and then to 6.9% in August. He said the Monetary Policy Committee was slow to adjust interest rates in light of the significant decline.
“High real interest rates are stifling economic activity, especially for industries that need capital to maintain operations and drive growth,” he added.
The textile sector, which represents the cornerstone of Pakistan’s economy and a major driver of exports and employment, has faced severe liquidity constraints due to unsustainable borrowing costs over the past two years. “Concessional financing is crucial,” Arshad said. “If no further relief is possible, the least that can be done is to lower interest rates to manageable levels.”
He said that high real interest rates discourage investment in key sectors, especially in textiles.
“Without access to affordable capital, these industries struggle to expand, innovate or compete globally, putting the export potential and livelihoods of millions of workers at risk.
“The current monetary policy stance is not compatible with efforts to stimulate economic growth. The Monetary Policy Committee’s priority must be to foster an environment conducive to recovery. With inflation falling significantly, there is sufficient justification for cutting interest rates significantly. Arshad noted that such The move would relieve financial pressure on companies, stimulate investment, enhance productivity, and generate job opportunities.
He said the APTMA was calling on the Monetary Policy Committee to take decisive action by cutting interest rates by at least 400 basis points, arguing that a sharp cut was necessary to revive the economy; creating financial space for public expenditures; Ensuring the survival and growth of vital industries.