April 24, 2024 (MLN): Arif Habib, Pakistan’s business magnate and founder of the Arif Habib Group, emphasized the need for an immediate reduction in interest rates to bolster the economy, citing a significant decline in inflation.
Speaking at a gathering of Karachi's business community during Prime Minister Shehbaz Sharif's one-day visit, Arif Habib said that inflation had significantly decreased, with April's figures expected to fall to around 17.5%.
He also highlighted the International Monetary Fund's (IMF) projection of 12.7% inflation for FY25, a substantial drop from the current fiscal year's 24.8%.
"The biggest problem for the government as well as businesses right now are high interest rates," he said.
"The sooner we have a cut in the interest rate, the better," he added.
Habib asserted that there were some headwinds for Pakistan’s economy previously; however, those have passed.
He further pointed out that high energy costs and taxation are hindering businesses and driving up overall costs.
A reduction in interest rates would lead to substantial savings for the government, he said.
By combining these savings with increased central bank profits, the government could then pass on benefits to citizens through a reduction in tax rates, particularly the super tax, Habib said.
He stated that an interest rate cut would not only stimulate economic activity but also create a better sentiment.
Meanwhile, he highlighted, "You shook hands with the IMF managing director last year. The KSE-100 index then jumped 70% from around 42,000 to 72,000, adding $13 billion or Rs6 trillion in market capitalization."
Arif Habib suggested that the Prime Minister should also extend a handshake to neighboring countries, including India.
