High interest rates: Business community unable to borrow from banks

RECORDER REPORT

LAHORE: Lahore Chamber of Commerce and Industry (LCCI) has urged the government to lower banking spread, curtail massive bank borrowings made by it to improve access to credit to the private sector.

The LCCI President Irfan Qaiser Sheikh said that the business community was unable borrow from banks due to high interest rates at the first count and unavailability of cash because of excess borrowing by the government. He asked the government to lower banking spreads to encourage borrowings by the private sector as indicated by the International Monetary Fund (IMF). He said that the decline in banking spread would only be possible if the government stops massively borrowing from banks.

He said that there was a need to focus on the banking sector and to improve access to credit by discouraging preferential treatment. Lowering of banking spreads to make credit available to larger sector of the economy should be the part of the government's agenda but the situation is the other way round that has destroyed the very fabric of the economy.

Irfan Qaiser Sheikh said that it is very strange and unfortunate that the private sector that is the engine of growth is denied cheaper money while the most of the available credit is borrowed by the government to finance its own expenses. He urged the government to focus on cutting expenses because its inability to increase revenues and reduce expenses indicates that it will default soon. He said that the economic situation is not that rosy as is being painted by some circles rather it actually is in dire straits and needs wholesome approach to get hold of the things that are fast getting out of hands.

The LCCI President also criticised Nepra for making repeated hikes in electricity saying that the major impediment to growth is the energy sector. He added that 72 percent hefty increase in the last five months has troubled the entire businesses as their commodities were fast losing global buyers.

There is a need to improve the economic management", he said, adding if the government wants to broaden the tax net it would have to facilitate the private sector by curtailing banking spread and decreasing massive bank borrowings made by it. He said the country needs resource mobilisation and resolution of energy problem.