PESHAWAR: Senior Vice President of Pakistan Businesses Forum Muhammad Riaz Khattak has suggested the State Bank of Pakistan to adopt an ‘accommodative monetary policy’ stance and reminded the finance minister to fulfill his commitment of reining in inflation, besides cutting mark-up rate and strengthening the undervalued local currency against US dollar. While talking to members of the business community on Monday, he said the already unprecedented inflation and high mark-up rate have drastically reduced private sector borrowings during the first quarter of the current fiscal year. APP
The government estimated the economic growth rate would be in the range of 3 to 3.5pc, while international agencies predict it would be as low as 2.3% for FY23 amidst the highest key policy rate in the region.
Urging competitive interest rates at regional countries’ level, he said, the SBP’s stance of keeping the monetary policy rate high compared with the mark-up rate of China, India and Bangladesh is “not good for industrial growth”.
The current SBP policy rate is 15% while the inflation in September was over 23% compared to 27% in August, which shows the actual interest rate is negative with a wide margin.
The PBF SVP asked the finance minister to fulfil his commitment of maintaining an accommodative monetary stance in the near- and long-term to support the rare recovery, amid uncertain heavy floods worries and challenges in the country.
He stressed the need for a reduction in the discount rate, arguing that low key policy rate is essential to make the Pakistani exports sector, as well as the local industry competitive.
He also said that the achievements of high exports and stabilization of the economy require friendly monetary policy measures so that the debt liability of the business sector is compensated through lower markup rate.
He appreciated energy tariff relief for the export sector and asked the same incentive, especially for small to medium enterprises (SMEs) as the first step towards a cut in the production cost, while the second and vital step towards this direction would be bringing the discount rate parallel to the regional level with a view to provide level-playing field to the industry.
The decision would have the same importance for the domestic industry too, as it has also been facing the tough competition of cheaper imported merchandise in the country; following FTAs with several countries, he added.
Appreciating the SBP role in sustaining economic growth through supporting trade and industry, he said, the reduction in interest rate would be a vital relief to the business community. For this, the government will have to reduce the production cost of the industries to avail of this offer by the international buyers.
