LAHORE: The Lahore Chamber of Commerce & Industry Friday underlined the need for cut in markup rate in the larger interest of trade, industry and economy.
The LCCI President Almas Hyder said that in this scenario, when the inflation has decreased, the Government should reduce the Interest rate (SBP Policy Rate) from the current 10.75% to a Single Digit. He said that according to the data released by the State Bank of Pakistan, the Consumer Price Index (CPI) based inflation has reduced to 8.8% in the month of April 2019 as compared to 9.4% in March 2019. Core inflation, measured by non-food non-energy inflation, has also reduced to 7% in April 2019 as compared to 8.5% in March 2019.
The LCCI President said that reduction in interest rate is vital as the hike in interest rate has made borrowing expensive for private sector and discouraged investment. This is evident by the fact that our “Total Investment to GDP” ratio of 16.4% is the lowest in the region. Similarly our Domestic Credit to Private Sector as percentage of GDP stands at around 17% and is also the lowest in the region.
No doubt that government is making serious efforts to bring down the cost of doing business and for improvement in Pakistan’s international ranking in ease of doing business but it needs policy support. The LCCI Senior Vice President Khawaja Shahzad Nasir and Vice President Faheem-ur-Rehman Saigal said that despite higher inflation all the major economies have either curtailed or are in the process of reducing high interest rates to protect their economies.
They said that the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate. The LCCI office-bearers urged the State Bank of Pakistan to reduce markup rates to single digit in the larger interest of the industry and economy.
