Latest news with #GoharEjaz
Express Tribune
2 days ago
- Business
- Express Tribune
Gohar Ejaz seeks major interest rate cut
With the Monetary Policy Committee (MPC) set to meet on July 30 (Wednesday), former caretaker commerce minister Dr Gohar Ejaz has warned that Pakistan's current interest rate is crippling economic growth. He pointed out that the country's 11% policy rate against a 3.2% inflation rate results in a punitive real interest rate of 7.8%, nearly double India's 3.4% and over five times China's 1.4%. In a post on X, Dr Ejaz, who also chairs the Economic Policy & Business Development Think Tank, compared regional economic conditions, noting that Pakistani businesses are paying double the financing costs of their regional counterparts while also facing electricity rates of 12-14 cents per kWh, compared to 59 cents in neighbouring countries. "Pakistani businesses pay double regional financing costs while facing electricity at 12-14 cents/kWh versus 5-9 cents regionally," Dr Ejaz wrote in a post on X. Meanwhile, he highlighted, unemployment in Pakistan stands at a staggering 22%, in contrast to 4.2% in India and 4.57% in China. Referring to the country's previous macroeconomic volatility, he wrote: "The 2022 boom-bust cycle with $17.5 billion current account deficit was not caused by low interest rates but by $3 billion vaccine imports and $12 billion in higher oil and gas payments due to Ukraine war-induced global energy price spikesfactors completely unrelated to domestic interest rates." Dr Ejaz argued that fiscal and monetary policies appear to be working at cross purposes. "FBR targets 18% revenue increase while monetary policy suppresses the business activity generating taxes. State Bank reserves rose $5.4 billion to reach $14.46 billion (as of 18th July 2025) through borrowingnot exports or productive growth." Calling for urgent reforms, he suggested cutting the policy rate to 9% immediately and to 6% by 31st December 2025.
Business Recorder
6 days ago
- Business
- Business Recorder
Sections pertaining to arrest, detention be held in abeyance: APTMA says salutes COAS for his support
LAHORE: The All Pakistan Textile Mills Association (APTMA) extends its deepest and most heartfelt gratitude to Field Marshal Syed Asim Munir, NI (M) for graciously meeting with a business delegation led by Dr Gohar Ejaz, HI, SI (Civ). 'We salute the Field Marshall's exemplary commitment to engaging with the business community and industry, demonstrating both patience and concern for economic issues faced by the businesses and people of Pakistan.' During the highly constructive meeting, the delegation commended the government and SIFC's monumental efforts that have brought much-needed economic stability to the country and thanked the Army Chief for his unwavering support and resolve. It presented a comprehensive overview of the challenges faced by the industrial sector, with particular emphasis on the recently enacted expansions of the Federal Board of Revenue's (FBR) powers. Tax laws: PM directs formation of arrest powers review panel We are immensely thankful to Field Marshall Munir for immediately directing that the new provisions, particularly those added under Sections 37A and 37B of the Sales Tax Act, 1990 pertaining to arrest and detention, be held in abeyance, and for instructing the FBR to enter meaningful, solution-oriented dialogue with stakeholders and address their concerns. The GHQ will oversee progress through the Special Investment Facilitation Council (SIFC), fostering an environment of collaboration and trust. The delegation called for interest rates to be brought down in line with inflation to stimulate businesses and economic activity. It also highlighted the significant delay in notification of the Export Facilitation Scheme (EFS) amendments relating to exclusion of cotton, cotton yarn, and fabric from the scheme and imposition of an 18% sales tax on their imports. Field Marshal Munir assured the delegation that these measures, as announced in the Finance Minister's budget speech, will be implemented without delay. APTMA is grateful for the Field Marshall's attention to unsustainable electricity prices that are burdening manufacturers and businesses across the country. We appreciate his ongoing commitment to securing more competitive electricity rates for consumers nationwide, with special emphasis on revitalizing the industrial and export sectors. His unwavering support is a testament to his overarching vision to propel Pakistan's economic landscape to new heights. On behalf of the entire textile sector and business community, APTMA once again extends its profound gratitude to Field Marshal Syed Asim Munir NI (M) for his visionary leadership and steadfast dedication to Pakistan's progress and growth. Copyright Business Recorder, 2025
Business Recorder
19-07-2025
- Business
- Business Recorder
June C/A closes with $328m surplus: advisor
ISLAMABAD: Khurram Shahzad, adviser to the finance minister said that country's Current Account (CA) for June 2025 closes in $328 million surplus, taking full-year surplus to over $2.1 billion —annual surplus recorded after 14 years, and the largest surplus in 22 years. He further said that Real Effective Exchange Rate (REER) index has dropped further to 96.6, rendering PKR more competitive against US$, which should support country's exports and keep external account in check. Pakistan Equities Market (KSE-100) crossed 140,000 points, making a historic mark in its history, with market value crossing Rs16.8 trillion (close to $60 billion), he added. Separately, former caretaker minister Gohar Ejaz said the country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilisation efforts. 'In June, the Real Effective Exchange Rate (REER) stood at 96.61, indicating that the Pakistani rupee is currently undervalued. It is essential to maintain a market-based exchange rate to preserve macroeconomic progress. The country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilization efforts', Ejaz stated. He said that the State Bank of Pakistan (SBP) must continue to maintain positive real interest rates in accordance with the International Monetary Fund (IMF) agreement and basic economic principles. However, the current policy rate is 11 percent, while full-year inflation for 2025 stands at 4.6 percent. Maintaining a policy rate that is 6.4 percentage points above inflation lacks sound economic justification, he added. Copyright Business Recorder, 2025
Business Recorder
18-07-2025
- Business
- Business Recorder
Gohar says ‘essential to maintain market-based exchange rate'
ISLAMABAD: The country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilisation efforts. This was stated by former caretaker minister Gohar Ejaz. 'In June, the Real Effective Exchange Rate (REER) stood at 96.61, indicating that the Pakistani rupee is currently undervalued. It is essential to maintain a market-based exchange rate to preserve macroeconomic progress. 'The country is on track for positive economic development and growth, and any attempt to manipulate the exchange rate by any segment must be strongly resisted, as it would risk undoing three years of hard-earned economic stabilisation efforts,' Ejaz stated. He further said that the State Bank of Pakistan (SBP) must continue to maintain positive real interest rates in accordance with the International Monetary Fund (IMF) agreement and basic economic principles. 'However, the current policy rate is 11%, while full-year inflation for 2025 stands at 4.6%. Maintaining a policy rate that is 6.4 percentage points above inflation lacks sound economic justification,' he added. Ejaz said Pakistan recorded a current account surplus of $2.1 billion in FY25 — the first in 14 years — a direct result of consistent economic policies and a stable exchange rate. The stock market reflects this renewed confidence.
Business Recorder
28-06-2025
- Business
- Business Recorder
Bright economic future: EPBD for shifting resources away from banking returns to productive investments
ISLAMABAD: The Economic Policy and Business Development (EPBD) think tank has emphasised that Pakistan's economic future hinges on shifting financial resources away from guaranteed banking returns and towards productive investments. The group warns that commercial banks have effectively abandoned business lending in favour of risk-free government securities, creating a credit-starved economy. Established primarily by former caretaker Prime Minister Anwaar ul Haq Kakar and former caretaker Commerce Minister Gohar Ejaz, the EPBD in its comments on federal budget 2025-26, criticised the banking sector's overwhelming reliance on government debt. With the industry's Investment-to-Deposit Ratio (IDR) at 97.3 per cent, the think tank argued, almost no capital is left for working capital, industrial expansion, or technology upgrades. 'Pakistani businesses cannot compete, expand, or create jobs while banks earn guaranteed returns from government debt,' the EPBD said in a statement issued Friday. 'Meanwhile, regional economies with policy rates around 5.5 per cent and debt servicing burdens of 25 per cent are achieving 6 per cent growth through business-focused financial policies.' The think tank challenged the government's rationale for maintaining high interest rates—namely, to curb Current Account Deficits (CAD). The EPBD said that recent data disproves this assumption, citing the 2021–22 CAD spike, which was largely driven by non-interest-sensitive imports such as COVID-19 vaccines ($3.2 billion), energy products ($15.6 billion), and smartphones ($1.7 billion). 'High interest rates had no impact on controlling these imports but significantly damaged domestic economic activity,' the statement added. Pakistan currently allocates Rs7.197 trillion annually—46 per cent of federal expenditure—for debt servicing, much of which flows to banks as guaranteed returns. EPBD highlighted that 59 per cent of government debt (Rs25,758 billion) is in floating-rate instruments. A reduction in the policy rate from 11 per cent to six per cent would generate immediate savings on the majority of the debt stock. The think tank criticized the government's decision to issue Rs 2 trillion in fixed Pakistan Investment Bonds (PIBs) at peak interest rates of 22 per cent during FY23–FY24, saying it unnecessarily locked in high returns for banks. Nonetheless, the EPBD estimates that Rs 3 trillion in annual savings remain possible by lowering the policy rate on floating debt. With inflation now down to 4.5 per cent, the group argues that a 6 per cent policy rate would still offer positive real returns, while freeing up fiscal space to stimulate economic growth. 'This money could transform Pakistan's economy—reviving manufacturing, expanding industry, enabling technology investments, creating jobs, and developing SMEs,' the statement said. 'Instead, it guarantees banking sector profits while depriving businesses of financing.' The EPBD also criticised banks for operating more as bond traders than business lenders. 'They contribute nothing to productive economic activity,' it said. 'Even Pakistan's remittance system channels Rs87 billion to banks for simple money transfers—funds that could otherwise support SME growth.' The think tank stressed that businesses are not asking for subsidies but for a level playing field. Affordable financing would restore competitiveness with regional rivals, improve export potential, and enable widespread technology adoption. 'Manufacturing capacity exists but cannot grow. Exporters have potential but are shackled by high borrowing costs. SMEs could create jobs — if only they had access to credit.' According to the EPBD, regional economies demonstrate that supportive financial policies lead to six per cent growth while maintaining fiscal balance. 'These countries prioritise productive investment over rent-seeking by financial institutions. Their policies fuel broad-based development rather than concentrated profits.' In contrast, Pakistan's current fiscal model forces a binary choice: support economic growth or continue subsidising banking profits. 'The 11 per cent policy rate, coupled with Rs7.2 trillion in debt servicing, guarantees economic stagnation while our competitors build industrial strength,' it warned. The EPBD concluded by urging the government to realign its fiscal and monetary policies with business development objectives. 'Pakistan's economic future depends on redirecting public resources from guaranteed returns for banks to productive investments that create employment, enhance competitiveness, and drive sustainable growth.' Copyright Business Recorder, 2025
