Daily Times

Islamabad Chamber of Commerce and Industry (ICCI) on Saturday urged the State Bank of Pakistan (SBP) to immediately revisit and withdraw the increase in benchmark interest rates as it would impact negatively to the national economy.

It expressed concerns over hike of 2.5pc in benchmark interest rate taking it to 12.25pc and termed it a harsh measure as it would badly affect the growth of business activities and hurt exports.

In a press release, President ICCI Muhammad Shakeel Munir said that the policy interest rate was 4pc in India, 4.75pc in Bangladesh, 3.7pc in China, 0.5pc in Thailand and 0.75pc in Hong Kong, but it has been increased to 12.25pc in Pakistan, which was almost the highest in the region.

He warned that this massive hike in the policy interest rate would adversely affect all sectors of the economy and lead to further downfall in the trade and industrial activities. He urged the SBP to immediately revisit and withdraw this irrational increase as it would prove disastrous for the economy.

The ICCI President said that our economy was already facing many great challenges including rising inflation, sharp currency devaluation, unbearable foreign debt, depleting foreign exchange reserves, growing fiscal imbalances and dwindling foreign direct investments.

He said that in these circumstances, the government should have made significant cut in the benchmark interest rate to promote ease of doing business in order to revive the business and economic activities. However, the hike in interest rate would make the credit cost non-viable for the private sector due to which efforts to expand current businesses and make new investments would face massive hurdles.

He emphasized that the SBP to reconsider its decision and reduce the interest rate to make credit cost affordable for business class.

Jamshaid Akhtar Sheikh Senior Vice President and Muhammad Faheem Khan Vice President ICCI said that in the past, governments used the policy of increasing interest rate to control inflation, but this policy has failed miserably. They said that instead of controlling inflation, high interest rate would lead to rapid de-industrialization causing more slowdown in GDP growth. They urged that SBP to withdraw the increase in interest rate to save the economy from its negative consequences.