ICCI terms 5% cut in discount rate a positive step

  • October 06, 2012
The reduction of 5% policy discount rate is a positive step by the State Bank of Pakistan, however, for better growth of business activities, SBP should bring down discount rate to single digit level. This was said by Mr. Mehmood Ahmed Warraich, Senior Vice President, Islamabad Chamber of Commerce & Industry while addressing a meeting of businessmen, which was called to get their reaction on discount rate cut.
He said that low discount rate has a positive impact on the economy as it facilitates the commercial banks to provide low cost credit facility to businessmen and help them accelerate the growth of trade and industrial activities.
ICCI Senior Vice President said that the discount rates in the world as well as in the regional countries were much lower than Pakistan causing high cost of doing business in Pakistan and making our products uncompetitive in international market.
He said that the economy of Pakistan was facing multiple challenges as all important economic indicators were depicting negative trend. The FDI has witnessed a decline of more than 65 percent, manufacturing activities are in slump and exports have also come down. These circumstances call for bringing down discount rate to single digit level to encourage investment, revive industry and rejuvenate the overall economy.
The businessmen said that tight monetary policy of SBP has already done an irreparable dent to the growth of private sector, thus the provision of cheaper credit facility to entrepreneurs is the need of the hour to turn around the economy.
Such an arrangement will create multiple benefits for the economy including promotion of new investment, expansion of industry, creation of more jobs and improvement in government’s revenue generation, they observed. They stressed that in the next monetary policy review, SBP should reduce discount rate to single digit level in the larger interest of the economy.