The Friends of Business & Economic Reforms (FEBR) on Sunday said tight monetary policy and high markup rate in low growth environment always create bad debts in the private sector, squeezing fiscal space for the development.
In a statement issued here, President FEBR Kashif Anwar, demanding the central bank to relax key policy rate, said the current high interest rate will depress the domestic demand and retard the economic progress.
He said the current monetary policy will also stifle capital formation both in the public and the private sectors.
He said despite nominal growth, inflationary pressures are again building up in the economy while steep depreciation of the rupee is pushing up prices of imported industrial inputs, which will further cripple industrial activities.
Kashif Anwar said that it is high time that government should revise interest rate to turn Pakistan into a production economy.
He said our future lies in strengthening the production sectors, but that would require the government to make a decision and cut the cost of credit as there is no justification to keep interest rates that high particularly when this policy is unlikely to produce the desired results in the wake of cost-pushed inflation.
The LCCI former vice president said that tight monetary policy has not produced desired results for the economy in past as the inflation rate on which the current policy is based, is once again surging despite increasing key policy rate.
