IN its latest report, the State Bank of Pakistan (SBP) has underlined that international experience shows price stability is a necessary condition for sustained growth and development, adding that countries where price stability is a primary objective tend to have lower inflation, as well as less volatility in both inflation and growth.
It pointed out that the Government avoided focusing on growth for the fiscal year FY23 with the result that a steep fall in the growth is expected but even then it has failed to bring price stability along with financial stability.
The central bank has avoided giving a new range of the growth rate but international credit rating agencies have been predicting it to hover around two percent.
The sharp fall in growth caused mainly by negligible spending on development and falling domestic and foreign investment is already adversely affecting the overall economic scenario.
It has already resulted in heavy lay-offs from trade and industrial sectors with another big spell of retrenchments in the pipeline.
Textile millers, exporters and importers have been expressing grave concern over non-opening of Letters of Credit that has crippled the business cycle.
Non-opening of LCs is widely being used as a shield by importers and industrialists to create shortage of commodities and their prices are ballooning at a fast pace which would push the inflation further high even when the existing 25% is unsustainable for the people.
It is really pathetic that the Government ignored growth on the plea of tackling inflation but none of the objectives has been achieved as prices are soaring on a almost daily basis.
Therefore, a change of approach, as indicated by the SBP, is needed to rectify the situation.