Staff Reporter
Karachi
Engr. Daroo Khan Achakzai, President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) showed his serious concern over the declining of private sector credit by Rs 4.1 billion in the first four month of current fiscal year.
He stated that the declining of demand of private sector credit is due to high cost of borrowing and slow economic activity in the country which will subsequently affect the next year economic growth and unemployment.
While commenting on the monetary policy, he added that State Bank of Pakistan is continuously adopted concretionary monetary policy and keep the policy rate at 13.25% while on the other side the government has declined profit rates on the National Saving Schemes (NSS) which are discouraging the saving environment in Pakistan. He added that declining of lending rate on saving and high borrowing rates benefits the banks in term of high spread.
He further added that Savings are the backbone of investment viz., higher savings lead to higher investment and higher growth in an economy provided that the other macroeconomic variables are conducive and a developed financial system exists in the economy.
He underlined the need of declining of policy rate in Pakistan which is very high compared to regional economies like policy rate in India is 5.15%, China 4.35 %, Sri Lanka 8.0%, Malaysia 3.0%, Thailand 1.25%, Indonesia 6.5% etc.
