KARACHI: State Bank keeps Monetary Policy rate unchanged at 21 percent for the next two months due to expected ease in inflation of consumers and businesses, downward trend in global commodity prices and high base effect as a determining factor said Ateeq ur Rehman, economic & financial analyst.
“Simultaneously federal government presented budget for the fiscal year 2023-24 by proposing soft banks loans to SMEs, youth and IT without any consideration to reduce the enormous interest rate plus kibor, which is required to be paid by beneficiary as Interest with Principal amount, I should say is not workable. Under the dilapidated local circumstances there is no business practically exist attain the profit plus interest on month to month basis, actually,” he said.
He added that such huge number of basis points compliances, only to produce “Non-Performing Loans”. Thus, access to finance is not only difficult but impossible. Also, the cost of credit is unbearable. Eventually, produce of Businesses, Industry, Agriculture, etc needs funds for expansion, plant & machinery, raw material and dedicated difficult times.
Lavish borrowing by the government leaves no provision or allocation available for specific fund and spending for predominant requirements of economy.
Therefore, on such interest rates there is hardly any perspective funds are available to nourish the weak industrial, trade or business activities of the country.
Therefore it is requested that the existing interest rate should be brought down to promote easy financing to industrialization, agriculture, SMEs, etc and growth of Investments in the shape of FDIs and venture capital funding.
Copyright Business Recorder, 2023
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