|
Rate hike to affect traders’ interests
LAHORE: Lahore Chamber of Commerce and Industry, while expressing its surprise over SBP decision to further enhance the discount rate by 0.5 per cent, has said that it would hit the overall economy hard as the availability of equity to the business community has been made dearer with one stroke of pen.
In a statement issued here Saturday, the LCCI President Zafar Iqbal Chaudhry said that the State Bank of Pakistan has adopted a wrong way of dealing with inflation. He said that the cost of doing business has been increased that would ultimately hit the economic growth that has just started showing signs of recovery.
The LCCI President said that the State Bank of Pakistan decision would not help curtail fiscal deficit or in controlling inflation as it had not served the purpose in the past rather it would create troubles for the new investors.
Zafar Iqbal Chaudhry said that at this point in time when both the trade and industry are in dire need of some special package, the increase in interest rate would prove only counterproductive to economic recovery.
He said that the cost of doing business in Pakistan was already highest in the region so much so in India where inflation is 11 per cent and fiscal deficit was more than that of Pakistan, the interest rate is 5.75 per cent. "It would have been a great service to the country in general and to the economy in particular if the State Bank of Pakistan had taken the otherwise decision." The move is totally against the expectations on business doing community as the ground has been set for cost-push inflation, the LCCI President added.
The LCCI President said that State Bank should have reduced the banking spread from 7.8 per cent to 3.5 per cent to control the inflation instead of jacking up the discount rate by 50 basis points.
He said that Lahore Chamber of Commerce and Industry had been calling for increase in tax-to-GDP ratio and cut in expenditure but its demands always fall in deaf years and the policy makers always come up with such decision that directly hits and affects government credibility.
He said that it was very unfortunate that the policy rate had been jacked-up despite a promise by the former Finance Minister Shaukat Tareen that it would be brought down to single digit by all means.
The LCCI President urged the Prime Minister Yousuf Raza Gilani to look into the issue as the increase in policy rate was likely to compel more industries and trading houses to close down their businesses. -PR
|