KARACHI
The Federation of Pakistan Chambers of Commerce and Industry’s Businessmen Panel has rejected the central bank’s decision of jacking up key policy rate by 150 basis points to 8.75%, stating that Pakistan’s interest was already very high in view of the regional countries markup rates.
BMP Chairman Mian Anjum Nisar asked the SBP governor to fulfill his commitment of maintaining accommodative monetary stance in the near and long-term to support the rare recovery amid uncertain Covid-19 challenges. He stressed the need for reduction in discount rate, arguing that low key policy rate is essential to make Pakistani exporting sector as well as the local industry competitive.
The FPCCI former president said that achievements in exports and stabilization of the economy through the monetary policy measures now require to sustain again by extending reduction in the policy rates so that the debt liability of the business sector is compensated through lower mark-up rate. FPCCI former president observed that most economic activity data and indicators of consumer and business sentiments have shown continued improvement. The trade and industry need continued support from the government in the form of lower interest rate amidst such external shocks, he suggested. He said that the manufacturing recovery is also becoming more broad-based, with 12 out of 15 sub-sectors registering positive growth and employment beginning to recover.
Mian Anjum Nisar also demanded the immediate reduction in electricity tariff especially for SMEs as a first step towards cut in production cost while the second and vital step toward this direction would be bringing discount rate to the regional level with a view to provide level-playing field especially to the export industry. The decision would have the same importance for the domestic industry too, as it has also been facing tough competition of cheaper imported merchandize in the country following FTAs with several countries, he added. While appreciating the central bank’s role in sustaining economic growth through supporting trade and industry, he said that reduction in interest rate would be vital relief to the business community.
Irfan Iqbal Sheikh, the BMP’s presidential candidate for the FPCCI’s upcoming elections, said that after the Corona devastation, Pakistan should take advantage of those export orders canceled by the other regional countries. For this, the government will have to reduce production cost of the industries to avail this offer by the international buyers.
Irfan Iqbal, the former LCCI president, said that the central bank should announce an initiative related to loans for small and medium enterprises (SMEs), as the SME sector has to show collateral to banks, which are always reluctant to offer them concessional credit.
He termed the 8.75% key policy rate as very high, especially in the extraordinary prospects, suggesting to promote the present growth pace further in the industrial and service sectors through lowering of mark-up rate, as the economy is on track, with stability on external and domestic fronts. He said that the banking sector should also take measures to strengthen SMEs to stimulate the growth of trade and industry in the country as SMEs are considered the engine of economic growth. He said that usually banking industry in Pakistan was dependent on the strength and performance of the economy in which SME sector has attained an important role in terms of its growth potential and greater employment opportunities. He cited the example of Taiwan, Korea, Brazil, China and Turkey, who have been concentrating their efforts in developing the SME sector. He further said that SBP should initiate special schemes and come up with growth oriented policies to support the trade and industry.
