Businessmen have shown strong reservations over the steep increase in the benchmark interest rate by the State Bank of Pakistan and expressed concern that it would dent the economy.
“The central bank has raised interest rate by a sharp 150 basis points in one go,” said Rawalpindi Chamber of Commerce and Industry President Nadeem Rauf in a statement on Friday. “The sharp increase in the interest rate would discourage investors from pouring money in Pakistan and it will affect investment in different projects.”
The State Bank of Pakistan jacked up the benchmark interest rate by 150 basis points to 8.75% on Friday.
Rauf urged the government to withdraw the hike as it would increase the credit cost, leaving a negative impact on the growth of industrial activities and creating more difficulties for the small and medium enterprises (SMEs).
He added that Pakistan needed a quick revival of business and industrial activities to improve the ailing economy which endured a dent from the Covid-19 pandemic. He held the view that the raise in the interest rate would make the cost of credit unaffordable for the business community and affect the government’s efforts for promoting business activities.
RCCI chief said the government was facing pressure on the fiscal front and the increase in the interest rate would swell the budget deficit. He urged Adviser to Prime Minister on Finance Shaukat Tarin to review SBP’s announcement.
He also proposed to hold a meeting with the business leaders to discuss and devise a new strategy for steering the economy out of the current troubles.
Separately, the Lahore Chamber of Commerce and Industry (LCCI) expressed surprise over the State Bank of Pakistan’s decision to further enhance the discount rate and added that it would hit the overall economy hard.
In a joint statement, LCCI President Mian Nauman Kabir, Senior Vice President Mian Rehman Aziz Chan, and Vice President Haris Ateeq lamented that the availability of equity to the business community has been made dearer with one stroke of a pen.
Published in The Express Tribune, November 20th, 2021.