The Islamabad Chamber of Commerce & Industry (ICCI) has said that high interest is a major hurdle in the growth of business activities due to which economy is in a stagnant mode and called upon the State Bank of Pakistan to reduce the key interest rate to single digit level for reviving business activities.
In a joint statement, President ICCI Muhammad Ahmed Waheed, Senior Vice President Tahir Abbasi and Vice President Saif ur Rahman said that due to high interest rate, cost of doing business has increased manifold causing slowdown in business activities and investment.
They said that businessmen needed credit from banks to expand existing businesses and invest in new start-ups, but policy rate of 13.25 percent has made bank borrowing very costly for them due to which they were facing problems in promoting business activities.
The ICCI said that whenever interest rate went up, banks preferred to invest in government securities instead of providing credit to private sector that crowded out this sector from the credit facility. They said that hike in policy interest rate has affected the performance of all major industries and while the growth of SMEs also suffered badly.
They said that the value of rupee experienced sharp depreciation during the tenure of current government which should have facilitated the growth of exports. However, due to high interest rates, export-oriented sector was also suffering.
Therefore, the ICCI office bearers urged that government should bring down key interest rate to below 10 percent so that businesses could get credit at affordable cost from banks and focus on promoting business activities. It would create multiple benefits for the economy as it would facilitate the better growth of businesses, create more jobs, attract new investment, increase tax revenue and promote exports.