Islamabad Chamber of Commerce & Industry (ICCI) has strongly resented the raise of 50 basis points in key policy rate by SBP in new Monetary Policy taking it to 13 percent from 12.5 percent and termed it a highly unwise move as it will prove more harmful for the economy.

Mr.Zahid Maqbool, President, ICCI said that businessmen have been demanding single digit interest rate to promote private sector investment and to stimulate the economy. However, instead of bringing it down, SBP has further enhanced the interest rate which will slow down the growth of private sector despite the fact that private sector is considered as engine of growth for an economy.

He said SBP has claimed to control inflation by enhancing policy rate. However, this contention is not based on facts because hike in interest rate will push the inflation rate further up putting more burden on businesses and the common man.

He said this move of the government will hamper new investment, industrialization and expansion of businesses as it will further enhance the cost of doing business in the country.

He said already the upward revision in the prices of electricity, gas and POL products has adversely affected the business and industry and this hike will create more problems for entrepreneurs as it will deprive them of affordable financing.

Mr.Zahid Maqbool said the increase in interest rate will also affect the tax collection target of the government as the contraction in business activities triggered by high credit cost will lead to less business income and less tax revenue.

He said government should promote a business friendly environment by reducing utility tariffs and interest rate and should not resort to harassment tactics because such steps always discourage promotion of a tax culture.

Businessmen said that government should shun the practice of heavy borrowing from SBP and banking sector as this approach crowds out the private sector from credit facility. He said banks should be asked to provide easy loans to the entrepreneurs so that private sector could grow fast and steer the economy out of current troubles.