Tag: interest rate

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has praised the central bank for reducing policy rate by two percent to nine percent from 11 percent.

In a statement issued on Friday, Mian Anjum Nisar, President, FPCCI appreciated reduction in the policy rates by 2 percent from 11 percent to 9 percent by State Bank of Pakistan (SBP) in view of the current situation and banks should follow SBP immediately accordingly.

The reduction in policy rate by 4.25 percent in a month is commendable step of the government in the present situation that will positively affect cost of doing business and will encourage Investors and Industrialists to make new investment in the country.

The president FPCCI also said that the pandemic COVID-19 has affected the global economy and pushed to the depression resulting contraction in the economic activities and a threat to unemployment.

He told that the expected long-terms affects are more severe than the previous great depression losses.

He apprehended that the economy of Pakistan will contract by 1.5 percent due to COVID-19 in the current fiscal year and the government has to take immediate measures to protect the trade and industry that will ensure future employment, economic growth and socio-economic prosperity.

Present available resources must be utilized to safeguard the trade and industry so that our industry could be able to compete with global world after this crisis.

The whole economy is in lock down situation since last 26 days, and will continue for 3 months which is building liquidity crunch and our policies should address post CORONA situation so that business can run and jobs can be secured.

He also said that affected countries have considerably reduced interest rates and Pakistan’s trade and industry is also in a dire need to further reduction in the interest rate to nearly 5 percent so it could be sustain under the prevailing conditions.

He further stated that foreign exchange reserves are increasing due to assistance from IMF, World Bank, Asian Development Bank and other friendly countries so SBP also control and manage the market more effectively particularly the exchange rates.

FPCCI chief emphasized that the SBP Scheme of loans to industry for salaries payment of employees should be interest free and the government should also contribute in it as it will be a liability to payback with interest for the period when industry is closed and workers are at homes.

The scheme needs to be revisited with the consultation of the stakeholders who are facing multidimensional problems and are able to guide the policy maker under this terrible situation.

KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over recent significant rise in key policy rate by State Bank of Pakistan (SBP).
In a statement on Wednesday Engr. Daroo Khan Achakzai, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) showed his serious concern over the hiking of policy rate by another 150 basis points in view of prevailing inflation, devaluation of currency and twin deficit in Pakistan.
He added that SBP continues to operate a tight monetary policy despite the clear evidences that this policy strangulates investment and hampered the economic activities in Pakistan in Pakistan.
He underlined that the IMF bailout package will further create burden on poor segment of society in terms of rising utility prices which will ultimately increase inflation in the economy.
At present, every Pakistani possess a debt of one lac fifty nine thousands rupees.
The President FPCCI termed the contractionary monetary policy as an anti-investment policy which has declined the economic activities in the first ten month of the current fiscal year due to declining of large scale manufacturing and service sector.
He indicated that 12.25 percent policy rate is very high compared to regional economies like India 6.0 percent, China 4.35 percent, Sri Lanka 9.0 percent, Thailand 1.75 percent, Indonesia 6.5 percent, Malaysia 3.00 percent etc.
While commenting on the devaluation of currency, he stated that the rising of exchange rate will increases the prices of imports particularly petroleum products which comprises 30 to 35 percent import bill of Pakistan.
He suggested the government to intervene in the economy for currency stabilization and control of inflation. He said that the present inflation rate is 7.0 percent which is high compared to last year same period 3.8 percent; but this inflation is cost push inflation which can’t be controlled through demand management policies.
The major cause of rising inflation in the country is high cost of doing business particularly utility prices, increase in the prices of industrial inputs and shortage of essential items of daily necessity.
The Government should focus to increase the demand for credit by declining interest rates and make easy access to finance. Globally, the aim of monetary policy is to protect the value of the currency in co-ordination with the fiscal policy in order to achieve the objectives of macro-economic stability with constraining inflation and expansion of private sector investment, he added.
The President FPCCI further stated that the government should create its own fiscal space for financing its expenditures instead of borrowing from SBP and other institutions. During the first ten month of year, there was an expansion in private sector credit, but is largely attributed to working capital due to rising of input prices.
This private sector credit should be expanded to agriculture and industrial sector which are showing declining growth trend, he suggested.