Piaf urges SBP to reduce interest rate to single digit

RECORDER REPORT

LAHORE: Pakistan Industrial and Traders Associations Front (Piaf) has urged the Governor State Bank of Pakistan (SBP) to bring down the markup rate to single digit for the revival of economy.

In a statement issued here, the PIAF Chairman Engineer Sohail Lashari said that CPI inflation to 31-month low and below 10 percent in July after seven long months has raised the business community hopes reduction in SBP Policy Rate, unchanged at 12 per cent since October 10, 2011.

The PIAF Chairman said that though the energy crisis of the main spoiler of economic fabric of the country but high interest rates have also contributed considerably.

He said that ongoing economic scenario showed that there was hardly any time left for economic managers of the country and they all should understand well that a 50 to 100 basis point cut would be too little.

He said it was now before all of us that high discount rate was no more sustainable. It has been causing a great harm to economy and would continue to do so unless and until a realist approach was adopted.

Engr Sohail Lashari said that despite higher inflation all the major economies had either curtailed or were in the process of reducing high interest rates to protect their economies.

He said that markup rate in Pakistan was 12 percent while in Bangladesh it was 7.75 percent, in India eight percent, and in China 6.5 percent.

He said that growth domestic product GDP growth rate in Pakistan is around to only 3.2% while GDP growth rate in Bangladesh is 6.7 percent, in India 6.3 percent and in China 8.1 percent.

The LCCI President said the SBP should understand that its continued tighter stance was inflicting a very heavy loss on the nation as the economy had already paid a very high price because of high interest rate.

He demanded of the government to bring down the markup rate to single digit.