Daily Times

The Ferozepur Road Industrial Association (FRIA) senior vice chairman Shahbaz Aslam suggested the government to observe restraint while getting loans from commercial banks and improve governance to ensure over 5 percent growth target which has not been achieved so far.

He appealed the SBP to review its tight monetary policy stance as it will hamper the production and thwart the economic growth of the country.

The FRIA SVC was of the view that the SBP had taken the decision to enhance the policy rate as per instruction of the International Monetary Fund (IMF), as the decision is not based keeping in view the situation of trade and economy, he added. He said the SBP had taken a unilateral decision in view of the absence of any government.

He said the SBP had previously cut the interest rate on government intervention and pressure from businesses, but now it was free to raise the policy rate.

The FRIA cannot understand how the policy rate will curb food inflation as the high-interest rate and rupee depreciation will increase the cost of doing business, he said.

He said the SBP had been watching the rupee fall against the greenback from the sidelines since the political uncertainty has gripped the country. Now it has come up with minor cut in interest rates to do the rest of the damage to the economy.

He came down hard on the latest monetary policy declation by the central bank, which he said would make borrowing too expensive for them to continue with their operations.

He said inflation in Pakistan was cost-push, which spiked due to surging prices of commodities in world markets as well as deprecation of the rupee against the dollar.

The economy doesn’t have the capacity to absorb the high interest rate as it was already struggling with the weak exchange rate,” he pointed out.

He added that the free hand given to the SBP was in fact making matters complicated for the country, as well as industry.

Ruling out the impression that high interest rate would dent credit off-take to industry, he said in reality only large businesses were the beneficiaries of bank credits. SMEs are still deprived of this facility and will remain so in the present situation, he said.