The All Pakistan Business Forum (APBF) has flayed the State Bank of Pakistan for jacking the key interest rate by 250 basis points to 12.25% for the next two months on the excuse of dealing with emerging inflationary pressure in its Monetary Policy.
In a statement on Saturday, the APBF President Syed Maaz Mahmood said the SBP had adopted a wrong way of dealing with inflation as 250 basis points increase in discount rate would jack up the cost of doing business that would ultimately hit the economic growth.
He said with weaknesses in private capital inflows continue to persist, the Central Bank should cut policy rates to spur growth, as cut would infuse confidence in the business community and propel economy which was hostage to the past policy of austerity. The businessmen expecting the cut in interest rate, as the rate cut could help boost private sector growth. He also complained that lending to private sector by the commercial banks during the current fiscal year has not picked up pace.
Maaz Mahmood also called for steps to fight energy shortage, security challenges and political instability to make interest rate cut meaningful and result-oriented. He called for supporting large scale manufacturing and credit to the private sector which is sliding, stopping flight of capital, improving tax machinery and curbing speculation of different sectors.
APBF Chairman Ibrahim Qureshi suggested the government to observe restraint while getting loans from commercial banks and improve governance to ensure over 5 percent growth target which has not been achieved so far.—INP
