The Lahore Chamber of Commerce & Industry (LCCI) has expressed dismay over the State Bank of Pakistan’s (SBP) latest policy hike, which has taken the policy rate to a staggering 21%. According to the LCCI, this unprecedented increase in markup rate will put all businesses in deep trouble, leading to a rapid de-industrialisation across the country.
In a statement released on Wednesday, LCCI President Kashif Anwar, Senior Vice President Zafar Mahmood Chaudhry, and Vice President Adnan Khalid Butt said that the increase in markup rate will have dire consequences for the growth of trade and industry. Instead of trying to control inflation by increasing interest rates, the LCCI believes that the best way to reduce inflationary pressures is by increasing domestic production, industrialisation, and export growth.
“The prevailing policy rate in Pakistan is already much higher than other economies in the region,” said Anwar. “This essentially means that access to finance, which is imperative for the growth of industry and trade, is already more expensive in Pakistan as compared to other economies in the region.” The LCCI officials added that the increase in policy rate would massively escalate the borrowing cost of the government, resulting in further worsening of the fiscal deficit. Furthermore, the hike in markup rate has brought borrowing costs to the highest in the last six years.
Published in The Express Tribune, April 6th, 2023.
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