KARACHI: The president of Employer’s Federation of Pakistan said the decision of IMF is a manifestation and EFP gives credence to the rejection of government’s request to keep a door open for borrowing from State Bank of Pakistan (SBP), since the maneuvers of borrowing from the central bank will lead to a further amplification in the already peaked up inflation rates.
In a statement, the EFP president said a central bank in real terms, is meant to control money supply in the economy, being only the lender of last resort, particularly to the commercial banks.
It is worth bearing in mind that when an entity as large as a government resorts to borrowing from the central bank, the bank itself has no option but to print more money which fuels further inflation and negatively impacts the economy.
Ismail Suttar further said the EFP adheres to the belief that diversion of funds to government usually restricts private sector borrowing and this is a negative factor.
Copyright Business Recorder, 2021