KARACHI: The Federation of Pakistan Chambers of Commerce & Industry (FPCCI), the country’s apex trade body rejected the central bank decision of raising interest rate to 12.25 percent, saying the decision would not go in favor of domestic businesses and industries.
Ifran Iqbal Sheikh, president FPCCI, said businesses had been already deprived of any government support, and the policy rate hike by State Bank of Pakistan (SBP) would add to their difficulties. “Business, industry, and trade community is shocked and clueless at the same time on how to cope with its fallout on economic activities, viability of doing business in the country, and inevitable adverse impacts on exports,” Sheikh said. He stated that increasing the interest rate could not be justified to stopping the current tide of inflation. “It [inflation] was due to political uncertainty and lack of any direction in economic policies.”
FPCCI president added that the policy rate Pakistan was comparatively quite higher than regional countries such as Malaysia at 2 percent, China at 3.7 percent, India at 4 percent, and Bangladesh at 5 percent.
“Pakistan will not be able to compete with the regional countries with high interest and export refinancing rates.”
He elaborated that it was the business community’s demand, even before the recent interest rate raise, that the policy rate should be gradually brought down from 9.75 percent to ensure availability of capital to businesses at lower and affordable rates.
“Contrary to what was needed, the interest rate has now been hiked to 12.25 percent, which will put a halt to the economic and commercial activities in the country,” he lamented.
Outlining three factors, Sheikh said that volatile rupee-dollar parity, uncertainty in political &economic environment and interest rate hike will totally crush the SMEs; as cost of doing of doing business, ease of doing business, access to capital, access to foreign exchange and remaining profitable will all be next to impossible for SMEs. FPCCI president reiterated that if the policy rate hadn’t been brought down, there would be bankruptcies, export orders would not be fulfilled, loss of tax revenue, and loss of employment opportunities.
