KARACHI: President Lasbela Chamber of Commerce and Industry (LCCI), Yakoob A Karim on Thursday urged State Bank of Pakistan (SBP) to reduce discount rate by at least 200 basis points in order to provide some relief to the industry and help for revival of economic activities.
In a statement, LCCI President Yakoob A Karim said that SBP had to make a drastic cut at least by 2500 to 300 basis points in the monetary policy being announced on November 15, 2014 for two months. He said that due to highest interest rate in the region, the bank financing for industrial sector had become unaffordable.
LCCI chief said that unchanged or a cut of 50 to 100 basis points would not be doing any service to the dwindling economy. “It is 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 past few years. The present government is also following the anti-economy and anti-investment policies of the previous regime.
He said that economic managers should understand well that a 50 or even 100 basis points cut would be too little. “Despite higher inflation, all the major economies have either curtailed or are in the process of reducing high interest rates to protect their economies.”
He said that the central bank should understand that its continued tighter stance was inflicting a very heavy loss as the economy had already paid a very high price because of high interest rate. Karim said urged SBP to announce at least 200 to 300 basis points cut in markup rates in the forthcoming Monetary Policy that would certainly give some breather to the ailing industry.
He further pointed out that government itself has to pay huge amount as mark-up on the loans it acquired during past seven years if the discount rate is not curtailed.
He added that business community had already rejected SBP’s monetary policy stance of ‘no change’ in the discount rate, forecasting more problems for businesses due to the ongoing political instability.
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