The Islamabad Chamber of Commerce & Industry has slammed the decision of State Bank of Pakistan to further hike the policy rate by 1.5 percent taking it to 12.25 percent from 10.75 percent as it would enhance the credit cost for private sector, increase cost of doing business, discourage new investment and affect the overall economic growth of the country and called upon the government to withdraw this decision to save the economy from further problems. The Chamber said that at the one hand, government was giving assurances to promote ease of doing business, but at the other hand, it was taking decisions that would create more difficulties for the private sector.
Ahmed Hassan Moughal President, Rafat Farid Senior Vice President and Iftikhar Anwar Sethi Vice President, Islamabad Chamber of Commerce & Industry said that the economy of Pakistan was passing through a tough period and government should have reduced interest rate to provide easy credit to private sector for expansion of businesses and better growth of economic activities. However, making 150 bps hike in interest would add to the difficulties of private sector by enhancing cost of doing business and discourage new investment as one investor would like to invest in Pakistan in an environment of exorbitant credit cost.
ICCI President said that with increase in interest rate, banks would also prefer to invest in government’s securities that would bring them risk-free high returns. This situation would squeeze credit availability for private sector leading to further slump in business and economic activities.He urged that government should review the hike in interest rate and take measures for creating an enabling environment for private sector that was the best option to facilitate the growth of business activities, encourage new investment, improve exports and steer the economy out of troubled waters.