Thursday May 23, 2024

Interim commerce minister sees interest rate cuts as rupee gains

By Tanveer Malik
September 23, 2023

KARACHI: Interim commerce minister Gohar Ejaz said on Friday he expects the central bank to lower interest rates in the next two monetary policy reviews as the rupee strengthens and inflation eases.

Ejaz, who took charge of the ministry last month, told a meeting of the Karachi Chamber of Commerce & Industry (KCCI) that the current interest rate was too high for businesses and should be brought down.

“I believe that four percent fall in interest rate each in two next monetary policy will be witnessed with the dollar deprecation, which may come down further in the coming days,” he added.

Ejaz said the interest rate hike was a wrong policy as inflation in Pakistan was driven by currency depreciation rather than demand. He said the rupee was expected to appreciate further and advised businessmen to divest from Dubai and bring back their dollars. “I tell you that you will be in loss as the dollar value will go down.”

Ejaz also addressed the concerns of the business community over gas and power shortages and tariffs, saying there was no gas in the country and whatever was available had to be used efficiently.

He said Punjab industries were not getting gas at $9 per million British thermal units (mmBtu) and that Karachi industry could also get it if it opted for the 300 million cubic feet per day (mmcfd) gas available in Sindh, which otherwise might go to the power sector.

The minister also announced that a crackdown would start against gas theft from next week, similar to the one against power theft in the country. Regarding electricity, Ejaz proposed that industries in Karachi should adopt a dedicated 1,300 megawatt (MW) power plant for them on a wheeling basis, which would be purely for their needs with no capacity payment for them to pay.

The minister said the government was considering closing markets early to save power and urged consumers to change their buying patterns. He also spoke about smuggling, saying illegal trade under the Afghanistan transit trade and trade with Iran had swelled and that $400 million to $500 million were being paid from the grey market to finance this illicit trade.

On exports, he said the government had formulated a strategy to engage international brands by facilitating them in Pakistan and considering Pakistani brands of textile in the global market and a conference would be held soon in this regard.

Ejaz said that the present caretaker setup is a move towards enhancing the exports. “My goal is to achieve $37.5 billion exports in the current fiscal year,” he said and shared that the government had been working on the vision to take the exports to $100 billion in the next five years.