Expressing deep disappointment, Islamabad Chamber of Commerce & Industry has slammed SBP decision to make a meager cut of 50 basis points in policy interest rate despite repeated requests from business community for bringing it down to single digit level to stimulate the economy.

Zahid Mabqool, President, ICCI, giving is reaction, said that SBP should have made substantial cut in interest rate for the revival of business and economic activities in the country instead of reducing it from 13 percent to just 12.5 percent as it will not yield any positive results for the country.

He said that tight monetary policy has negatively impacted the economy in many ways as it has sufficiently hiked the cost of doing business, created problems for businessmen and discouraged local & foreign investment causing more than 53 percent decline in foreign investment during the first four months of current financial year. He said the better option to steer the economy out of current unprecedented crisis was to create conducive environment for which hefty cut in interest rate was one of the basic requirements.

Zahid Maqbool said the main pretext of maintaining monetary policy tight was taming the inflation. However, now inflation has substantially come down, which necessitated great cut in interest rate to turn around the economy. He said high interest rate has damaged particularly the industry bringing industrial productivity to its lowest ebb and leading to closure of many industrial units. This was the main reason that there was no employment generation in the country, he added.

He said high interest rate has also badly affected the competitiveness of our exportable products. The high cost of doing business and uncompetitive business environment along with existing high cost of borrowing would have more negative implications on the overall economy, particularly in the industrial sector.

ICCI President said if the government wanted industrial revolution, expansion of business & economy, poverty reduction and employment generation, then the optimum way for achieving these objectives was to bring the interest rate to single digit.