PEW seeks more hike in interest rates

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The Pakistan Economy Watch (PEW) on Monday said the central bank should hike interest rates to double digits to tame demand in the market which is damaging the overheating economy.

Pakistan’s inflation rate is the highest in Asia and a hike in discount rate rise will help mop up excess liquidity which is necessary but it has implications on the quality of life of the general public, it said.

Twenty-eight percent increase in textile exports in five months is heartening and its credit goes to the positive policies of the government while rising international demand and erosion of local currency has also played its role, said Brig. (retd) Aslam Khan, Chairman Pakistan Economy Watch.

Textile exports have increased by 28 percent to 7.8 billion dollars as compared to the corresponding period and the government should continue to support the major export earning sector, he added.

He noted that the government had waived duties and taxes on imports of raw materials used in various industries including textiles in the last budget while the system of payment of refunds had also been improved.

The exporters were also given better access to capital which had a positive effect on the situation.

Aslam Khan said that due to the policies of the government, the import of textile machinery increased by 97.9 percent from July to November, which shows that the textile sector is moving towards expansion and innovation.

During the five months in question, cotton imports increased by 31.2 percent due to sharp decline in local cotton production.

From July to November, total exports increased by 27 percent from 9.74 billion dollars to $12.36 billion, he said.

The leather sector is also recovering but it needs a boost as despite increased demand ss the leather exports that stood at $1.25 billion per year in 2007-08 have declined to $833 million.