KARACHI: The Pakistan Business Forum (PBF) has shown disappointment that SBP kept the interest rate unchanged for the third time in a row and maintained the status quo to push inflation down; however, inflation till now it high, but the production of industry is suffering day by day.
PBF Provincial Chairmen’s Atif Ikram Sheikh, Muhammad Naseer Malik, Daroo Khan Achakzai, Muhammad Ashafque Paracha and Shabnum Zafar said on Monday that Finance Division and State Bank of Pakistan must realise the gravity of the crisis and implement immediate measures to support businesses and encourage investment in the country.
Implementing business-friendly policies is not merely about preserving jobs in the steel industry; it is essential for the overall economic wellbeing of Pakistan. The health of the steel industry has a direct impact on the broader economy. Our policymakers must focus on creating an enabling environment and formulating long-term policies to foster our local industries.”
They categorically apprised the government that the entire business, industry and trade community of Pakistan has refused to accept a key policy rate of 22 percent; no commercial bank will now lend to private-sector for anything less than 24 to 25 percent.
They questioned the efficacy of country’s monetary policy and noted that interest rate has been unchanged without attaining any intended headway in the curtailment of inflation; and, if that is not the governance & regulatory failure, then what will be the failure look like to move the government for a course correction, they asked.
They highlighted that in its latest report, the International Monetary Fund (IMF) has projected the GDP growth rate for Pakistan at 2.5% only for FY24.
They also stressed that the exports are heading north as it has posted a slow growth in export numbers. They added that PBF is worried that the two major industries where the government should have had its focus vis-à-vis growth in export earnings are in systematic decline, i.e., textiles and IT.
PBF Advisory Board led by Engr Ghanzafar Ali Khan said that Pakistan’s current policy rate of 22 percent is well above regional countries, including China, India, and Bangladesh, where the policy rates are 2.75 percent, 6.5 percent and 6 percent, respectively.
Inflation in Pakistan; however, appears to be deep-rooted and it mainly stems from substantial exchange rate depreciation, unprecedented hike in international commodity prices, multiple rounds of hikes in energy tariffs and other prescribed measures under the IMF program.
Despite the progressive and major hikes in the policy rates inflation remained stubbornly-high and further surged in a manifestation of an utter failure of the monetary policy.
Copyright Business Recorder, 2023
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