KARACHI: Chairman of National Business Group Pakistan and President Pakistan Businessmen and Intellectuals Forum, Mian Zahid Hussain has said the central bank has unnecessarily increased interest rates. The decision will increase the difficulties of the business community and add to the cost of doing business, he said.
Mian Zahid Hussain said that the move will shrink the economy, increase unemployment and make many things more expensive.
He said that industrialists and traders were already facing severe difficulties in getting electricity and gas. The central bank has increased the interest rate by 125 basis points to reduce inflation, cut trade deficit, and subdue demand to save foreign exchange reserves. Now the interest rate is at 15 percent; the highest since June 2008, making it difficult for many to continue their business.
Mian Zahid Hussain said that at present the overall inflation in the country is 21.32 percent, food inflation in urban areas is 24 percent and in rural areas is 27 percent while the central bank has said that this year inflation will be between 18 to 20 percent.
The central bank has asked the government to protect the poor from the effects of inflation through targeted subsidies while the rich should play their due role.
Mian Zahid Hussain said that the negative effects of the SBP’s tough decision will soon be felt while the achievement of the bank’s targets is not certain.
He further said that the relentless use of monetary policy to control inflation is not right as it poses a threat of recession and unemployment so the government should take administrative and policy measures to provide relief to the people. Agricultural commodities are very expensive in Pakistan at the moment and it is impossible for the central bank to control their prices. The government will have to reduce the difficulties of the agricultural sector so that agricultural production can be increased.
Mian Zahid said that the prices of crude oil, edible oil and other agricultural commodities in the global market have come down significantly due to which the prices in neighbouring countries have been reduced twice a week therefore steps should be taken to reduce prices in Pakistan.
Copyright Business Recorder, 2022
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