LCCI terms rate cut meagre

RECORDER REPORT

LAHORE: The Lahore Chamber of Commerce and Industry on Friday termed the 50-basis point cut in mark-up rate as meagre and half-hearted attempt to revive economy, saying that the industry wanted the State Bank to bring it down to a single digit. LCCI’s President Farooq Iftikhar, Senior Vice-President Irfan Iqbal Sheikh and Vice-President Mian Abuzar Shad in a joint statement said on Friday that the SBP Governor should have taken a bold step and curtailed the interest rate by at least 150 basis points. “The decrease will hardly improve local investment situation.”

They said that for government, it meant a decrease in debt-servicing costs as it was the biggest borrower. The slash in the interest rate in August last trimmed the government’s debt-servicing by over Rs40 billion. But, they said, for private sector, it was not very encouraging. Availability of cheaper liquidity to the business community was crucial, as the SBP’s tight “monetary mantra in the name of financial discipline is causing irreparable damage to the private sector’s growth”, adding that it had brought an unusual surge in unemployment.

“Neither any industrial expansion took place nor any investor put money in any new business venture. And one of the reasons was unavailability of cheaper money to the private sector.”

The LCCI President, meanwhile, called for measures to overcome the energy crisis, security challenges and political instability to make interest rate cut meaningful and result-oriented. “If these factors are not taken into account, they will continue to create problems for the economy in general and for the private sector in particular.”

He also urged the Governor of the State Bank of Pakistan to review other banking policies and called for facilitating the private sector.