Business community rejects ‘historic’ increase in policy rate

Business community rejects ‘historic’ increase in policy rate

F.P. Report

PESHAWAR: Businessmen here on Thursday termed the decision of State Bank of Pakistan (SBP) to historically raise the key interest rate by 125 basis points, taking it to 15%, which will prove detrimental for industrial growth, economic and trade activities.

Sarhad Chamber of Commerce and Industry president Hasnain Khurshid Ahmad while chairing a meeting of industrialists and traders here at the chamber’s house, said the business community ‘rejects’ historic increase in interest rate, jacking up from 13.75 per cent to 15 per cent.

The meeting was attended by chamber’s senior vice president Imran Khan Mohmand, vice president Javed Akhtar, industrialists, traders and exporters in a large number.

Hasnain said the historic hike in policy rate will increase the cost of doing business. He added the decision wasn’t in the best interest of the country’s economy, industries and businesses, which should be revised immediately.

Trade, industrial and commercial activities have already slowed down as result of several waves of Covid-19 while announcement of hike in policy rate by SBP under prevalent circumstances is completely incomprehensible, the SCCI chief told the meeting.

He urged the Prime Minister Shehbaz Sharif and Finance Minister Miftah Ismail to take notice of this whopping increase in interest rate by the central bank.
The SCCI’s president recalled that SBP had previously made a hike by 2.5 per cent, jacking up the interest rate at 13.75 per cent and again raising it by 125 basis points, taking it to 15 per cent, which will hurt investment and increase the cost of businesses.

Comparing Pakistan with neighbouring countries, Khurshid said the policy rate in India is around 4.9 per cent and Bangladesh at 5.5 per cent, but has raised it up to 15 per cent in Pakistan, which is a completely unfair decision and unacceptable to them under the prevailing economic conditions in the country.

He observed the country’s economy has been put into ventilator owing to inconsistent policies, now it will further hurt after hike in the interest rate.

He continued to say that the hike would bring a new wave of inflation in the country, and would also negatively impact the country’s exports. He added the current statistical figures are indicating negative growth and further deteriorating in coming days.

The SCCI’s chief attributed that drastic reduction in foreign exchange reserves, exports, trade deficit along with gas and energy crisis as result of inconsistency in economic policies and whopping foreign debts.

Hasnain called for revisiting economic policies. He requested the Acting Governor SBP, Dr. Murtaza Syed to take back the decision of increase in interest rate in order unhurt trade and commercial activities in the country.

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