The Rawalpindi Chamber of Commerce & Industry (RCCI) showed strong reservations against the decision of the State Bank of Pakistan (SBP) to increase the policy interest rate by 100 basis points to 9.75 percent.
The RCCI President Nadeem Rauf in a statement said that it is very surprising that SBP, which as per best practices, reviews its monetary policy after two months decided to increase the number of monetary policy reviews from six to eight times a year.
RCCI chief urged the government to withdraw the hike as it would increase the credit cost of commercial banks. He said that the hike will have a bad effect on the growth of industrial activities and create more difficulties for the small and medium enterprises (SME) and harm the government’s efforts aimed at reviving the economy.
He said the central bank had raised its interest rate by a sharp 100bps in one go. He said that the sharp increase in interest rate would also discourage investors from investing in Pakistan and badly affect different projects.
Rauf said that the country needed a quick revival of business and industrial activities to improve the ailing economy which was badly hit by Covid-19. He added that the increase in interest rate would make the cost of credit unaffordable for the business community and badly affect their efforts for promoting business activities.
RCCI chief said currently that the government is facing pressure on the fiscal front, and this increase in interest rate will increase the budget deficit.
