ISLAMABAD
The ICCI has expressed displeasure over the decision of the State Bank of Pakistan (SBP) to increase the policy interest rate from 7 percent to 7.25 percent, saying it will increase the credit cost for private sector and affect the growth and expansion of business activities.
ICCI President Sardar Yasir Ilyas Khan demanded that the government should withdraw the increase in interest rates and bring it down to below 5% in order to facilitate the growth of business activities, said a statement issued on Wednesday.
He said that the business community has been urging the government for a long time to reduce the interest rate to 4% that would help them to combat the impact of Covid-19 pandemic and expand business and investment activities with the availability of low cost credit.
However, contrary to their demands, the SBP has further increased the interest rate, which will create new difficulties for the business community.
Giving a comparison of interest rates of regional countries, he said that the central bank interest rate is 0.5% in Thailand, 1.5% in Malaysia, 3.5% in Indonesia, 3.85% in China, 4% in Vietnam & India, 4.75% in Bangladesh and 5% in Nepal; however, SBP has increased it to 7.25% which will affect the growth of business and economy.
Yasir said that the best way to stabilise Pakistan’s economy is to create favourable conditions for the business activities. On the contrary, in Pakistan, the value of rupee is falling, prices of petroleum products and electricity & gas rates are being raised, laws for tax collection are being tightened and interest rates have also been raised.
He said that such measures by the government would further increase the cost of doing business, hike inflation for the common man and slow down the pace of economic growth instead of improving it. Therefore, this situation demands that the government should revise such harsh policies and take the private sector into full confidence so that a joint strategy can be formulated to put the economy on the path of sustainable development.
ICCI Senior Vice President Fatma Azim and VP Abdul Rehman said that in the current difficult situation, the government should focus on adopting a soft monetary policy and reduce interest rate instead of raising them so that the private sector can take advantage of the easy credit facility to expand business activities and make new investments which will create more jobs, reduce unemployment & poverty, increase exports and tax revenue, and move the economy towards fast recovery.
