APTMA Calls for Lower Interest Rates to Boost Pakistan’s Textile Exports
In Lahore, Pakistan, the All Pakistan Textile Mills Association (APTMA) is urging a reduction in interest rates to enhance textile exports amid ongoing inflation. Kamran Arshad, Chairperson of APTMA, has requested a 400 basis point cut, highlighting that the current 10.6% effective interest rate hinders industry growth. Despite inflation dropping to 6.9%, the interest rate remains at 17.5%, posing challenges for the sector.
Arshad argues that lowering interest rates is crucial for economic recovery and job creation, as high borrowing costs threaten the textile industry’s stability. Finance Minister Muhammad Aurangzeb suggested that the State Bank of Pakistan (SBP) might consider further rate cuts in its November Monetary Policy meeting. The SBP has already reduced the rate by 450 basis points, from 22% to 17.5%, to support economic growth while controlling inflation.
Pakistan, a member of the International Monetary Fund (IMF) since 1950, has participated in 25 IMF programs, with the latest being a USD 7 billion loan approved in September 2024. This marks the highest number of IMF programs for any country since Pakistan’s independence in 1947.
Doubts Revealed
APTMA -: APTMA stands for the All Pakistan Textile Mills Association. It is a group that represents the textile industry in Pakistan, which is important for making clothes and fabrics.
Interest Rates -: Interest rates are the cost of borrowing money from a bank. If the rates are high, it becomes expensive for businesses to take loans to grow their operations.
Basis Point -: A basis point is a unit of measurement for interest rates. One basis point is equal to 0.01%, so 400 basis points mean a 4% change.
Inflation -: Inflation is when the prices of goods and services go up over time. It means you need more money to buy the same things as before.
State Bank of Pakistan -: The State Bank of Pakistan is the central bank of Pakistan. It manages the country’s money supply and interest rates.
IMF -: IMF stands for the International Monetary Fund. It is an organization that helps countries with financial problems by giving them loans.
USD 7 billion loan -: This means Pakistan borrowed 7 billion US dollars from the IMF to help with its financial issues.
