Lahore, March 19, 2015 (PPI-OT): State Bank of Pakistan (SBP) should pave way for much-needed new investments in the industrial sector by bringing down discount rate in the upcoming monetary policy.
In a statement issued here Thursday, President of the Lahore Chamber of Commerce and Industry Ijaz A. Mumtaz said that though State Bank of Pakistan was doing right moves by bringing down the discount rate in the last monetary policy but that was not enough to give a breathing space to the industrial sector.
Ijaz A Mumtaz said that a notable cut of at least 2 percent in the discount rate by the State Bank of Pakistan would inject fresh blood to the industrial sector which was facing a number of internal and external challenges.
LCCI President said that SBP positive initiative would also make the Pakistani products competitive in the international market as fluctuation in discount rates controls the industrial input cost.
He said that this fact should be an eye opener for the policy makers that Japan, Sweden and Switzerland are aiding their industrial sector at 0% discount rate as compared to 9.5 percent in Pakistan.
Ijaz A. Mumtaz said that the benchmark interest rate in Pakistan was last recorded at 10 percent. He said that interest Rate in Pakistan averaged 12.55 Percent from 1992 until 2014, reaching an all time high of 20 Percent in October of 1996 and a record low of 7.50 Percent in November of 2002.
He said that State Bank of Pakistan has to bring down the interest rates keeping in view the ground realities and strict competition in the international market. He said that a cut of 50 to 100 basis points would not be doing any service to the challenged economy.
He said that it was very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the State bank of Pakistan in the yester years.
LCCI President said that ongoing economic scenario shows that there is hardly any time left for economic managers of the country and they all should understand well that a 50 to 100 basis point cut will be too little.
He said that it is now before all of us that high markup rate is no more sustainable. It has been causing a great harm to economy and would continue to do so unless and until a realist approach is adopted.
Ijaz A. Mumtaz said that the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate.
He urged the State Bank of Pakistan to announce at least 200 basic points cut in markup rates that would certainly give jumpstart to the economic activities in the country.
For more information, contact:
Lahore Chamber of Commerce and Industry (LCCI)
Lahore -54000, Pakistan