Businessmen in a meeting at Islamabad Chamber of Commerce and Industry hailed the 25 basis point cut in the benchmark interest rate bringing it down from 6% to 5.75% and termed it a positive move as it would be instrumental in reducing cost of credit for private sector and spurring economic activities in the country. 

 

Addressing the meeting, Atif Ikram Sheikh, President, Islamabad Chamber of Commerce and Industry said that the country has already missed the economic growth targets for the current financial year by a wide margin mainly due to depressing performance of agriculture sector and hoped that cut it policy rate to over 40-year low would support the economy to perform better. He said the low policy rate has a direct impact on industrial growth as it reduces the cost of production and provides credit to private sector at affordable cost. Therefore, this move should help private sector in reviving the economy. 

 

Atif Ikram Sheikh said that our textile exports have declined by 7.68 percent coming down to $10.395 billion during the first 10 months of the current year (July-April) as compared to $ 11.26 billion during the same period of last fiscal year. This has happened despite the grant of GSP Plus status to Pakistan by the EU, which should be a cause of concern for the policy makers.

 

However, he was optimistic that historic cut in benchmark interest rate would help the industrial sector to avail low cost credit for upgradation of technology and machinery as one of the major reasons of fall in exports was that the local industry failed to invest in modernization and diversification to explore new exports avenues. 

 

The businessmen said that the industry was accounting for nine percent to GDP and more than 60 percent to exports, however, it was facing liquidity crunch on account of delay in export refunds of about Rs.50 billion by the FBR due to which the exporters were losing competitiveness in the international market. They urged that FBR should ensure timely clearance of refund claims to facilitate the exporters that would help them in overcoming liquidity issues and reviving exports of the country.