SBP urged to reduce mark-up rate

RECORDER REPORT

LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has urged the Governor State Bank of Pakistan to reduce markup rate by 150 to 200 basis points in the monetary policy being announced on Friday.

The LCCI President Irfan Qaiser Sheikh in a statement on Wednesday said the decision to cut markup rate to single digit is inevitable for the sake of revival of businesses, overcome low-growth scenario, encourage new investments and give a jumpstart to the sluggish economy.

He said that the availability of cheaper money to the business doing people is a must to bring down the cost of business in Pakistan and expedite the process of industrialization that would ultimately result in curtailing poverty, inflation and help in much-needed job creation.

He said that interest rate in the United States is 0.25 percent, 0.5 percent in UK, 1 percent in Canada, in Australia 3.5 percent, in China 6.56 percent, in India 8 percent, in Sri Lanka 7.75 percent and in Bangladesh 7.75 percent.

The LCCI President said that how Pakistani merchandise could get a place in the international market in the presence of such a high markup that neither has a parallel in the developed world nor in the region. The ongoing economic scenario shows that there is hardly any time left for economic managers of the country to help stop industrial closures and defaults. Thus the people sitting at the helm of affairs in the government and the State Bank of Pakistan should understand well that a cut in interest rate would be a great favour to the economy, he said.

The economic meltdown in recent years had already proved that high policy rate had caused a great harm to economy and would continue to widen the fiscal deficit unless and until a realistic approach towards this very important area is adopted, he said.

He further said that all the major economies despite having higher inflation rates have either curtailed or are in the process of reducing interest rates to protect their respective economies. Irfan Qaiser Sheikh said the State Bank of Pakistan should understand that its continued tighter stance is inflicting a very heavy loss on the nation, as the economy has already paid a very high price because of high interest rate.