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SBP denies financial assistance to textile industry
Islamabad—The State Bank of Pakistan has refused to
provide any financial assistance with low mark-up rate to the
textile industry citing huge internal borrowing burden, sources told
Business Recorder here on Saturday. The mark-up rate rose three-fold
in 4 years. The rate, which stood at 3.5-4 percent in 2003-04,
jumped to 16 percent in 2008. A member of the Federation of Pakistan
Chambers of Commerce and Industry, requesting anonymity, told this
scribe that a few months back SBP Governor Dr Shamshad Akhtar during
her visit to FPCCI, said that SBP is not ready for any financial
assistance to textile industry especially with low mark up rates.
She emphasised that the bank was already preoccupied with huge
internal borrowings. For instance, the government of Pakistan has
already borrowed Rs 400 billion in the current fiscal year against
the target of Rs 181 billion set for the year. The inflationary
pressure is likely to build up further, with headline inflation
projected to be in the range of 8.0 percent for the whole year,
higher than the target by 1.5 percentage points. The textile sector
is facing numerous challenges amid high mark-up rates, shortage of
energy, gas, unskilled labour, and imposition of GST on the import
of latest machinery.
“We are demanding for the mark up rate to be not more than 5-6
percent as the high rate is not only creating trouble for industrial
concerns but also making Pakistani goods uncompetitive in the global
market,” sources said. Only because of high mark-up, nobody is ready
to put up new industry. This situation can lead to massive
unemployment that has already rendered 40,000 people jobless within
four months (December-March 2007).—APP
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