State Bank of Pakistan’s has decided to cut the interest rate by 100 basis points – from 9.5% to 8.5%. CREATIVE COMMONS
LAHORE: Business lobbies on Monday welcomed the State Bank of Pakistan’s (SBP) decision to cut the interest rate by 100 basis points – from 9.5% to 8.5% – saying it would not only help stimulate private sector growth but also bring down the inflation rate.
“It was a longstanding demand of the Lahore Chamber of Commerce and Industry (LCCI) that the mark-up rate should be at the lowest to provide some breathing space to industries,” said LCCI President Ijaz Ahmed Mumtaz. “The SBP governor deserves appreciation for bringing down the interest rate by a whole percentage.”
Despite this, the LCCI called for measures to make the interest-rate cut meaningful and result-oriented as if other economic factors were not taken into account, they would continue to create problems for the economy in general and the private sector in particular.
“The cut will help ensure availability of cheaper money to the cash-starved private sector besides encouraging potential foreign investors to bring financing to Pakistan,” he said. “We hope that in the upcoming monetary policy, the interest rate will be lowered further.”
Textile industry relieved
All Pakistan Textile Mills Association Chairman SM Tanveer said the demand for a 1.5% reduction in the interest rate was not completely met, but even the 1% cut will reduce the cost of doing business by a significant margin.
“Reduction in the interest rate is a good omen and it is a step in the right direction,” he said. “It provides an enabling environment for sustainability and expansion of the textile industry.”
All Pakistan Business Forum President Ibrahim Qureshi, while terming the rate cut well for businesses, said it would help stimulate private-sector growth. He, however, called for measures to overcome the energy crisis, security challenges and political instability to make the rate cut meaningful and result-oriented.
“A downward revision in the policy rate would create liquidity for the industry, which was already braving high cost of energy and production besides other problems,” said Qureshi. “It would also help the exporters in the competitive international market besides pushing up the productivity level.”
Published in The Express Tribune, January 27th, 2015.
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