Business leader warns interest rate hike could deepen economic stagnation in Pakistan

Prominent business leader and United Business Group (UBG) Patron-in-Chief SM Tanveer has strongly criticised the recent 100 basis point increase in interest rate, warning that the move could push the country towards greater economic stagnation.

In a statement issued on Monday, Tanveer said that despite rising international oil prices, such a sharp hike in interest rate was unprecedented globally. He cautioned that the tightening of monetary policy would have serious consequences for Pakistan’s economy.

Highlighting the fiscal impact, he noted that with government debt standing at around Rs60 trillion, even a one percent increase in interest rate would add approximately Rs600 billion to the national interest burden.

Tanveer expressed concern that the manufacturing sector was already struggling under high borrowing costs, which are further exacerbated by increasing energy prices and the overall cost of doing business. He said these combined pressures are severely hampering industrial growth.

He pointed to a worrying trend of industrial closures across the country, attributing it to the dual burden of elevated interest rate and rising energy costs.

Calling for urgent action, Tanveer urged authorities to immediately reverse the monetary policy tightening to prevent further de-industrialisation and provide relief to the private sector, enabling it to sustain economic activity.