ICCI resents 100 basis points hike in interest rate

Islamabad: The Islamabad Chamber of Commerce & Industry (ICCI) has strongly resented the 100 basis points hike in the interest rate by the State Bank of Pakistan taking it from 6.5 per cent to 7.5 per cent and called upon the government to withdraw this exorbitant hike as it would enhance the credit of commercial banks, badly affect the growth of business activities and create more difficulties for the private sector in its efforts aimed at reviving the economy.

ICCI President Sheikh Amir Waheed said that the central bank has raised its interest rate by a sharp 100 basis points in one go, which was an unprecedented move as it was the biggest increase in the interest rate during the last 10 years. He said that the sharp increase in interest rate would discourage investors from considering Pakistan for investment and badly affect investment in CPEC projects. He said that Pakistan needed quick revival of business and industrial activities to improve the health of the economy, but 100 basis point increase in interest rate would make the cost of credit unaffordable for business community and badly affect their efforts for promoting business activities. He said the move would also unleash a new wave of inflation in the country as hike in interest rate always increased cost of doing business.

He said the caretaker government has badly failed to stabilise the economy as interbank exchange rate has increased to Rs.127 to a dollar that would plunge the economy into serious troubles. He said that private sector was importing many items that were being used as inputs for manufacturing activities. However, the sharp fall in the value of rupee would further enhance cost of production that would make our products highly uncompetitive in the international market and cause further further fall in exports.

Sheikh Amir Waheed said that at a time when our currency was experiencing constant devaluation, exports were falling, trade and current account deficits were rising, the government should have maintained easy monetary policy by keeping interest rate low so that private sector could avail easy credit facility for expanding business activities and play leading role in reviving the economy. He was afraid that rupee devaluation and 100 basis points increase in the interest rate would further make cost of doing business almost unaffordable for the private sector. He emphasized that government should withdraw recent hike in interest rate and go for its gradual increase to save the private sector from further troubles. He urged that the caretaker finance minister should urgently hold a meeting with the business leaders to discuss and devise a new strategy for steering the economy out of current troubles.