KARACHI: Amid vehement demand for 200 basis points cut in the rate, the State Bank of Pakistan (SBP) is set to unveil its Monetary Policy for the next two months today Saturday.
Prior to the announcement, the SBP board of directors is meeting to fine-tune the monetary policy following the Advisory Committee on Monetary Policy meeting to make recommendation for the BoD.
On the other hand, the businessmen suggested a cut in the rate to provide relief to the private sector following improvement in all sectors of the economy, declining inflation, balance in the government borrowing and current account deficit and healthy growth in remittances that has help the foreign exchange reserve to rise to $13.4 billion.
Meanwhile, former LCCI VP Kashif Anwar said that the SBP had to make a drastic cut at least by 200 to 300 basis points in the monetary policy. He said that due to highest interest rate in the region, the bank financing for industrial sector had become unaffordable.
Mr Anwar said that unchanged or a cut of 50 to 100 basis points would not be doing any service to the dwindling economy.
On the other hand, Pakistan Carpet Manufacturers and Exporters Association (NZ) Senior Vice Chairman Qamar Zia said that economic managers should understand well that a 50 or even 100 basis points cut would be too little. “Despite higher inflation, all the major economies have either curtailed or are in the process of reducing high interest rates to protect their economies.”
He said that the central bank should understand that its continued tighter stance was inflicting a very heavy loss as the economy had already paid a very high price because of high interest rate.
Qamar Zia said urged SBP to announce at least 200 to 300 basis points cut in markup rates in the forthcoming Monetary Policy that would certainly give some breather to the ailing carpet industry.
He further pointed out that government itself has to pay huge amount as mark-up on the loans it acquired during past seven years if the discount rate is not curtailed.
APCMA former chairman Aizaz Mansoor Sheikh said that rising foreign exchange reserves and lower inflation provide a base for minimum 150-200 basis points cut in the interest rate. “If the interest rate is not reduced, it means the government is still under the IMF pressure and taking dictation for economic policies,” he added.
Aizaz Mansoor Sheikh regretted that industry was facing unprecedented challenges due to high mark up rate and many other factors but government was not ready to facilitate industry in this respect.
