Capital market cannot thrive amid high interest rates: Finance minister

Caretaker Federal Finance Minister Dr Shamshad Akhtar has said that Pakistan's economic indicators are showing signs of improvement. However, she has cautioned that capital market cannot perform well amid high interest rates, reported 24NewsHD TV channel.

She was addressing the IPO Summit 2024 to empower the future of the capital market under the Pakistan Stock Exchange, in Karachi via video link on Saturday.

Dr. Akhtar said that the participants of the summit have given valuable suggestions regarding trade in the country, adding that the IPO Summit would provide better ways for economic stability.

She said that international investment is necessary for the future of Pakistan, everyone has to work together for the economic improvement and stability of the country.

The minister said that the capital market has an important role in bringing in foreign investment, a stable capital market is necessary to mobilize local resources. She said that the government has introduced reforms in the stock market despite challenges. The stock market reforms introduced for the development of the market have been proved productive, she maintained.

She said that to move forward, increase in exports and improvement of infrastructure is necessary.

“We have heavy responsibilities, the capital market cannot develop amid strict interest rates, after receiving the second installment of the IMF, our foreign exchange reserves have become US $9 billion.”

Dr. Akhtar further said that during current financial year, it is expected that the agricultural growth would be more than 5% while industrial growth would exceed 2%.

She said that our taxation system has been improved and country’s rate of economic growth is 2 to 2.5 percent. The current account is in surplus, she added.

She said that the government is laying the foundation for foreign investment. She maintained that record inflation was witnessed globally and global conditions affect our market.

The caretaker federal minister was of the view that we have to get out of the mindset of doing business by taking loans from the banks. Dependence on the banking sector has to be reduced for obtaining capital, she added.

She said there is a need to raise stock market capital. For the first time in 15 years, only one IPO has taken place in 2023, with which the company has raised Rs435 million through the stock market. She said that there is a need to increase the number of investors, currently there are 0.2 million investors.

She said that a reduction in the T-Bills yield below the policy rate is welcome. The State Bank officials also think that the interest rate should be lower. The reduction in interest rate is related to the rate of inflation, she held.

Earlier, PSX Chief Executive Farrukh H Khan said in his address that many well-known companies could not achieve success without being connected to the capital market. He said that the PSX and SECP facilitate companies to attach with the capital market.

SECP Chairman Akif Saeed said in his address through video link that the capital market is the engine of economic development, adding that the SECP continues to guide companies and take steps for their improvement.