Ahsan Zafar Bakhtawari, President, Islamabad Chamber of Commerce and Industry (ICCI) said that due to the current economic crisis and high prices of electricity, gas and petroleum products, the business community is already facing great difficulties as the cost of doing business has increased manifold.
In these unfavorable business conditions, the State Bank of Pakistan has further increased the interest rate to 17%, which will prove disastrous for business and investment activities besides further increasing inflation for the common man.
He said that in order to revive the economy, Pakistan needs a boost in economic activities, but further increase in interest rates would make bank credit almost unaffordable for the private sector leading to further contraction in business activities.
Ahsan Bakhtawari said that hike in interest rate would also increase the budget deficit and foreign debt of Pakistan as according to a conservative estimate, one percent increase in the interest rate surges the foreign debt by 170 billion rupees.
He said that interest rate in China is 3.65%, Bangladesh & Vietnam 6%and India 6.25%, but the 17% interest rate in Pakistan is higher in the region which would make our exports more uncompetitive in the international market.
He said the developed world including USA and Europe has kept the interest rate less than 5%, but in Pakistan, it has been increased to 17%, which would put the private sector at great disadvantage.
He said that the business community of the entire country has always been demanding of the government to keep the interest rate in the single digit level in order to provide cheap credit facility for promotion of business and industrial activities and attract FDI.
He stressed that the State Bank of Pakistan should withdraw the recent hike in interest rate and consider further reducing it to save the businesses and the economy from further troubles.
Faad Waheed, Senior Vice President ICCI, said that no foreign investor will invest in Pakistan in an environment of such high interest rate. He said that the industry has to take credit from banks to acquire machinery, plant and other equipment, but further hike in the interest rate would hamper the growth of industrial activities and reduce exports.
He demanded that the government should withdraw the hike in interest rate to save the industry and economy from further damages.
Engr. Muhammad Azhar ul Islam Zafar, Vice President ICCI, said that the builders and developers have to finance many construction projects through banks and a hike in interest rate would hit the construction industry.
He urged that the government should bring down the policy interest rate to single digit, which will pave the way for the better growth of business and economic activities and help revive the economy.