Daily Times

Mr. Irfan Iqbal Sheikh, President FPCCI, has expressed his grave concerns that the contractionary and regressive monetary policy being practiced in the country has effectively brought trade and industry to a standstill and there will be economic stagnation in the country like never before. He added that the 15pc policy rate at the moment is the highest in the last 14 years.

Mr. Irfan Iqbal Sheikh has noted with profound concern that the export finance scheme (EFS) and long-term financing facility (LTFF) meant for export-oriented industries have been linked with SBP’s policy rate as well, and now only 500 basis points worth of discount is left for exporters; while EFS was 3pc & LTFF was 5pc at the start of the year 2022.

Therefore, exporters have been deprived of a major protective mechanism against interest rate hikes – making them further vulnerable and uncompetitive to regional, sub-regional and international export markets. He added that this is all being done in the name of effective monetary policy transmission.

Irfan Iqbal Sheikh explained that what the country needs is pretty simple:

Private-sector & foreign direct investment (FDI) and the resultant employment generation, increased tax collection, and a healthy economic growth rate.

FPCCI President maintained that the current phenomenon of stagflation in the country is not demand-pull and it will not come down by irrationally increasing the interest rate to an excruciatingly high level; where borrowing from the formal sector becomes unviable.

Mr. Irfan Iqbal Sheikh said that uncertainty in the political & economic environment, ever-so-volatile rupee-dollar parity, and incessant interest rate hikes will totally burgeon all the sectors across the board; as cost of doing business, ease of doing business index, access to business financing, access to foreign exchange for imports and operating anywhere near to being profitable will all be next to impossible for trade & industry.

FPCCI President stated that the trade deficit for the fiscal year 2021 – 22 has been recorded at $48.3b and it has resulted in a current account deficit (CAD) of $15.2b in 11 months of July 2021 – May 22. He expressed his shock that on a Month-on-Month (MoM) basis, CAD has increased by 131pc from $618m in April 2022 to $1.425b in May 2022. He added that the only way forward is to increase our exports substantially and post double-digit growth in exports each year.