The Economic Policy and Business Development (EPBD) has called on the State Bank of Pakistan (SBP) to immediately reduce the interest rate to 6 per cent, citing urgent concerns over declining economic activity.
In its latest statement, the EPBD noted that Pakistan’s real interest rate stands at 7.8 per cent — the highest in the region — compared with India’s 3.4 per cent and China’s 1.4 per cent.
The statement warned that 22 per cent unemployment and stagnant industrial activity pose a significant threat to the national economy. The EPBD cautioned that, without a substantial cut in interest rates, both exports and employment levels would continue to suffer.
It further highlighted that the current energy cost in Pakistan is 12.14 cents per kilowatt-hour — more than double the regional average of 5.9 cents — which has severely undermined industrial competitiveness.
The EPBD also criticised the SBP’s foreign exchange reserves, stating that they have grown primarily through external borrowing rather than genuine trade expansion.
According to the statement, tax collection for the fiscal year 2025 fell short of the target, reaching only Rs11.9 trillion. The EPBD argued that, under prevailing government policies, meeting revenue goals would remain unattainable.
The body emphasised that the upcoming meeting of the Monetary Policy Committee (MPC) on 30 July 2025 would be crucial in determining the country's economic trajectory.
The EPDB stated that a reduction in the interest rate could result in immediate savings of Rs3 trillion in government debt servicing — a potential catalyst for economic recovery.
