High policy rate continues shrinking business

The State Bank of Pakistan (SBP) has made significant hikes in the policy interest rate due to which business activities are shrinking and if this situation continues, our economy will weaken more in the coming days and investments will also be discouraged, Islamabad Chamber of Commerce and Industry (ICCI) President Ahsan Zafar Bakhtawari said.

While addressing a delegation from the Jhelum Chamber of Commerce and Industry (JCCI), which visited ICCI led by its President, Malik Khawar Shehzad, to congratulate the new office bearers of ICCI, he pressed the government to bring the interest rate down to single digits so that business can be promoted with ease and the economy can come out of its current difficulties.

The ICCI president explained that, currently, the interest rate in Thailand was at 1%, Taiwan at 1.63%, Malaysia at 2.5%, South Korea at 3%, China at 3.65%, Vietnam at 5%, Bangladesh at 5.75% and India is at 5.9%, but the interest rate in Pakistan was at 15%, the highest in the region, which is a major obstacle in the way of promoting business activities.

“The best way to bring Pakistan’s economy out of trouble is to significantly increase exports, but this is very difficult to do in an environment with high interest,” he observed saying that a single digit interest rate would increase business and investment activities and help improve the economy.

The JCCI president said in his address that due to the high interest rate, high prices of POL and utility tariffs, and other factors, business and industrial activities were facing great difficulties that had resulted in closure of 1600 textile factories.

Therefore, he demanded the government take concrete steps to promote the ease of doing business and reduce the interest rate otherwise, more businesses will close down.

“Due to an increase in the interest rates, the country’s debt has also increased many folds. Pakistan’s debt, which was 48 billion dollars in 2008, has now increased to 116 billion dollars, which is alarming,” he warned.

Other ICCI members too stressed that the government make a future strategy in consultation with the business community to promote business and economic activities so that Pakistan can be put on the path of better development and growth.

Published in The Express Tribune, October 16^th, 2022.

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