KARACHI – SITE Association of Industry (SAI) President Abdul Hadi warned that the State Bank of Pakistan’s decision to raise its policy rate to 12% will deepen financial distress among struggling manufacturers, discourage investment and undermine prospects for industrial recovery.
Reacting strongly to 50-BPS increase, Hadi called the decision extremely difficult for the business community to absorb, particularly when factories are already battling high operating costs and weak capacity utilisation.
He said manufacturers were contending with expensive electricity and gas, elevated production expenses and rapid shifts in the global economic environment. Many industrial units, he added, were running far below their installed capacity and barely managing to remain operational.
Hadi warned another increase in borrowing costs would place businesses under further pressure and make recovery more difficult. SAI president criticised the Monetary Policy Committee for overlooking repeated demands from industrialists to bring the policy rate into single digits. He said the decision raised concerns that the sector’s financial and operational challenges were not receiving serious attention.
Hadi cautioned that the impact would extend beyond businesses seeking fresh loans. Alongside making new financing more expensive and difficult to obtain, the increase would raise the interest burden on existing borrowing, further straining companies’ finances.
That additional pressure, Hadi warned, could weaken industrial growth and discourage entrepreneurs from committing fresh investment at a time when manufacturers were already struggling to sustain production.
Calling for an urgent rethink, Hadi urged Sharif-led government and the central bank to prioritise the concerns of the industrial sector and take concrete steps towards a single-digit policy rate.
State Bank raises Policy Rate to 12pc as Inflation risks Mount in Pakistan
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