The Islamabad Chamber of Commerce & Industry (ICCI) has called upon the State Bank of Pakistan’s Monetary Policy Committee (MPC) to make decent cut in policy interest rate while reviewing the monetary policy on July 27, 2021 and bring it down to 3-4% in order to stimulate the economic activity and turn around the economy.
Sardar Yasir Ilyas Khan, President, Islamabad Chamber of Commerce & Industry said that countries around the world had made drastic cut in policy interest rate to enable businesses to combat the impact of Covid-19 pandemic, but the State Bank of Pakistan was still maintaining interest rate at 7%, which was considered quite high as compared to many other countries. Giving a comparison, he said that policy interest rate in Japan was -0.10%, European countries zero percent, Thailand & South Korea 0.50%, Philippines 1.50%, Malaysia 1.75%, Indonesia 3.50%, China 3.85%, India 4% and Pakistan 7%, which has made the credit cost quite high for businesses in our country and was considered a major constraint for expansion and smooth growth of business activities.
ICCI President said that due to Covid-19 pandemic, business community was facing many challenges in Pakistan in promoting business activities smoothly and it was the best time that the SBP Monetary Policy Committee should reduce interest rate to at least 3-4% that would produce multiple benefits for the economy as it would provide cheap credit to the private sector of expansion of existing businesses and making new investment, bring down high inflation to provide relief to the common man, reduce cost of doing business and boost the business and economic activities across the country. He said that the low interest rate would facilitate the business class in expanding their business ventures and making new investments in potential sectors of the economy that would ultimately lead to fast recovery of economy. It would also make Pakistan an attractive destination for FDI.