KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has lambasted the central bank for raising interest rate to 17 per cent and said it will not help in curtailing inflation.
In a statement on Monday, FPCCI President Irfan Iqbal Sheikh said that the current tide of inflation is not demand-pull and raising the interest rate will do no good to curtail the inflation; as the phenomenon is cost-push due to the supply-side disruptions; increasing commodity prices in the international markets; progressively weakening rupee; loss of produce due to floods and lack of planning on the part of the government.
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He expressed his profound concerns over the burning issue of the abysmal state of access to capital for businesses from banking channels; as after a further raise of 100 bps in SBP’s policy rate; making it 17 percent; commercial banks would not be willing to lend to businesses for anything less than 20 percent.
Sheikh explained that capital and liquidity is like blood or lifeline for businesses; and, it is the responsibility of the government to protect businesses in general & SMEs in particular in these harsh ease of doing business and cost of doing business times.
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He highlighted that access to capital from commercial banks and formal channels is so low that only 7 percent of businesses actually borrow from the banking system. No economy can grow; set up new industry or expand the existing ones; produce jobs; increase exports and achieve import substitution with such a high lending rates.
FPCCI chief demanded that the government must announce a targeted amnesty scheme to the industry; and, must offer concessional business loans, EFS, LTFF and TERF scheme to avert the irreversible & inevitable losses to the business, industry and trade community. Our very survival is at stake and there will be no jobs left in the economy, if the businesses are not protected, he added.
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Suleman Chawla, SVP FPCCI, made it clear that the government must come forward and made running finance available to the export-oriented industries; so that, they can fulfil their export orders. We do not have adequate raw materials; electricity is the most expensive as compared to regional and sub-regional competitors; gas supplies are not sufficient and we cannot borrow from the banking system even for short-term, given the exorbitant & unaffordable interest rates.
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