Acting President Federation of Pakistan Chambers of Commerce and Industry has shown his concern on interest rate hike
Islamabad, November 16, 2013 (PPI-OT): Mr. Shaheen Ilyas Sarwana, Acting President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has shown his concern over the recent upward revision in the interest rates by 50 basis points to 10 percent due to inflationary expectation as announced by SBP in new monetary policy statement on November 13, 2013. This is the second increase during the last two months, as previously in September the SBP raised the discount rate by 50 basis points to 9.5 percent.
He indicated that government has signed policy framework paper with the IMF for the next three years. According to section 16 of Para B( Monetary and Exchange rate policies of the Memorandum of Economic and Financial policies signed by Finance Minister and SBP Governor with the International Monetary Funds (IMF), to address declining reserves and a projected rebound in inflation, the SBP will adjust monetary and exchange rate policies. Though the Memorandum with IMF covers monetary and fiscal policies, taxations, and trade policy, however, private sector has not been consulted before signing and finalization of the document.
Though Governor SBP officially declared a significant reduction in the bank borrowing by private sector but despite of this fact he announced an increase in interest rate. FPCCI is seriously concerned with significant decline in private sector lending from commercial banks.
The Governor SBP has admitted in his statement that Private sector is reluctant to borrow from commercial banks due to energy crises and deteriorating law and order situation, while Government has borrowed Rs.722.3 billion from banks to finance its deficit since July 2013. The lack of borrowing by private sector indicates the severe problem in industrialization and investment process. It reflects also the lack of investor’s confidence and deindustrialization in the country which is a cause of growing unemployment.
For more information, contact:
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Tel: 0092-21-35873691, 93-94
Fax: +9221 3587 4332
Category: Chambers of Commerce