KARACHI: The industrial sector on Monday criticised the central bank for keeping its policy rate unchanged at 22 percent, saying it was unbearable for the industries and would lead to closures and halt new investments.
The State Bank of Pakistan (SBP) decided to maintain the policy rate at, citing the impact of frequent and sizeable adjustments in administered energy prices on inflation and inflation expectations.
The representatives of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and All Pakistan Textile Mills Association (APTMA) showed disappointment over the status quo on the policy
rate and said that they had expected some cut, that could have helped the industry to take some breath of relief.
"This policy rate is unbearable for the industry, which may lead to closing of more industries," Saqib Fayyaz Magoon, acting president of FPCCI, told The News.
Magoon said that when industries had started expanding by bringing in new investment, the policy rate was 13 percent, however the scenario fast changed and policy rate jumped to an all time high level of 22 percent. He said the high interest rate had increased the cost of the industrial sector manifold, making it uncompetitive in the global market.
Magoon said the high interest rate regime had also discouraged investment in the industrial sector, which was already suffering from the high cost of energy and raw materials due to the appreciation of the dollar against the rupee.
He said the interest rate should be in the range of 10 percent to 12 percent to help the industry attract new investment for expansion and modernisation.
Asif Inam, chairman of the All Pakistan Textile Mills Association (APTMA), also expressed his disappointment over the decision to keep the policy rate unchanged, saying it was too high for the industry to grow.
Inam said APTMA had given the new government a roadmap to increase the country's textile exports to $50 billion from $25 billion, but this target could only be achieved by lowering the interest rate.
He said a single-digit policy rate could help the industry grow and contribute to the economic growth of the country.
"The rate in Pakistan was higher than in the region and lowering it could help the country export more and improve its balance of payments."