The President of the Islamabad Chamber of Commerce and Industry, Sardar Yasir Ilyas Khan, is displeased with the State Bank of Pakistan’s decision to increase the policy interest rate from 7 percent to 7.25 percent as it will increase the credit cost for the private sector, affect the growth and expansion of business activities, and will elevate inflation for the common man.
He has demanded that the government withdraw the increase in the interest rates and reduce them to below 5 percent to facilitate the growth of business activities.
He said that the business community has long been urging the government to reduce the interest rate to 4 percent which will help it combat the impact of the pandemic and expand business and investment activities with the availability of low-cost credit.
However, the State Bank of Pakistan (SBP) has instead elevated the interest rate even more, and this will create new difficulties for the business community.
The President of the Islamabad Chamber of Commerce and Industry (ICCI) gave a comparison of interest rates of regional countries and said that the central bank interest rate is 0.5 percent in Thailand, 1.5 percent in Malaysia, 3.5 percent in Indonesia, 3.85 percent in China, 4 percent in both Vietnam and India, 4.75 percent in Bangladesh, and 5 percent in Nepal. Regardless, the SBP has increased it to 7.25 percent, which will affect the growth of business and economy.
He explained that the best way to stabilize Pakistan’s economy is to create favorable conditions for business activities. On the contrary, the value of the rupee is falling, the prices of petroleum products and electricity and gas rates are being raised, laws for tax collection are being tightened, and interest rates have also been raised in the country.
Khan said that such measures by the government will increase the cost of doing business, hike inflation for the common man, and will retard economic growth instead of improving it. Therefore, the situation demands that the government revise such harsh policies and take the private sector into full confidence so that a joint strategy may be formulated to put the economy on the path of sustainable development.
The Senior Vice President of the ICCI, Fatma Azim, and the Vice President of the ICCI, Abdul Rehman Khan, said that the government should focus on adopting a soft monetary policy in the current difficult situation and reduce the interest rates instead of raising them. This will allow the private sector to take advantage of the easy credit facility to expand business activities and make new investments that will create more jobs, reduce unemployment and poverty, increase exports and tax revenue, and move the economy towards fast recovery.