Business community shows disappointment over new monetary policy

  • February 23, 2009

The phenomenon of jacking up of country’s policy rate from 13 percent to 15 percent had created lot of difficulties for business community. It had not only greatly raised the cost of doing business in the country leading to closure of many industries and rendering thousands people jobless, it had also raised the prices of our products due to which our exporters are facing stiff competition in international market hurting our exports. Therefore, businessmen were anticipating some relief measures in new monetary policy. They had particularly pinned hopes on SBP that it will bring down discount rate in new monetary policy keeping in view its negative impact on economic and business activities. But it seems that all our hue and cry against high interest rate has gone to deaf ears because the new monetary policy announced by SBP Governor maintaining interest rate at 15 percent has dent all our hopes for better future creating great disappointment in the business community. These views were expressed by Mian Shaukat Masud, President, Islamabad Chamber of Commerce and Industry while giving his reaction over new monetary policy.


ICCI President said for enabling business entities to cope with global economic recession, most of the countries have drastically brought down their interest rates to below five percent and some are heading towards zero interest rate, but our policy makers have taken no measures to facilitate trade and industry in these tough times. He said textile industry is playing key role in the exports of the country, but high interest rate has badly hit the textile industry due to which many textile units have been closed rendering workers jobless and it was expected that to revive all the industries including textile sector, government will bring down interest rate, but nothing has been done. He said high inflation has been termed as the main reason of maintaining high interest rate while interest rate has not contributed in any significant way to bring down the inflation. He said the main cause of high inflation was hefty rise in oil and commodity prices in international market while oil prices have drastically come down in world market and commodity prices are also on the decline due to which inflation in our country is coming down. Therefore, there was no logic for maintaining high interest rate to tame inflation.


Mian Shaukat Masud said to overcome current economic challenges, government should provide maximum facilities to trade and industry. He said promotion of business activities will create multiple economic benefits for the country as it will create new job opportunities, improve people purchasing power, reduce poverty and establish a sound middle class. He said no economy can thrive without a solid base of rising middle class which is clearly evident from the example of China and India because both countries are making great strides towards growth and development on the back of big middle classes. He said the best way to bring up a thriving middle class is to create enabling environment for the growth of business entities and urged upon the government to take measures to bring down interest rate to revive the industry and to facilitate business entities without wasting further time, otherwise things will get worst for the economy.