Businessmen demand withdrawal of rate hike

Islamabad Chamber of Commerce and Industry (ICCI) President Muhammad Shakeel Munir has called on the government to urge the State Bank of Pakistan (SBP) to withdraw the hike in its benchmark interest rate, which has been increased to 15%, to save the economy from further trouble.

“This historic high rate will badly affect the growth of business activities and cause further slump in the economy,” he remarked. Munir pointed out that the benchmark interest rate in Malaysia was only 2.25%, Indonesia 3.5%, China 3.7%, Bangladesh 4.75% and India 4.9%.

But the rate was 15% in Pakistan due to which “our private sector is struggling to compete effectively in trade and exports.” Such a massive hike in policy rate would prove disastrous for industries and SMEs as those sectors needed cheap loans for growth and expansion, he warned.

Munir demanded that the government intervene and act to withdraw the State Bank’s decision with immediate effect to save the private sector from more problems. Furthermore, the SBP’s move has come at a time when power, gas and petroleum prices have already reached new highs.

Munir said the interest rate in Pakistan was many times higher than other countries in the region owing to which no investor would consider investing or setting up new industries in Pakistan. “It is important that the SBP should consult with the stakeholders to save businesses and economy from the negative impact of the hike in its policy rate.”

Similar views were expressed by the ICCI senior office-bearers as they maintained that many industrialists had borrowed from banks and invested billions of dollars in importing machinery at a low mark-up rate in the last few years. However, they would not be able to import machinery and plants at a high rate. Therefore, the SBP should revise the interest rate, cut it down to single digit and help industrial activities grow, they said.