Increase in policy rate will affect all domestic investment: PTI

ISLAMABAD: Pakistan Tehreek-e-Insaf (PTI) and former minister for Economic Affairs Omar Ayub on Monday reacted to the State Bank of Pakistan’s decision of increasing the policy rate to 22 percent, saying it is an indication that central bank is expecting even more inflation.

In a statement issued on Twitter, he said that the increase in policy rate would badly affect all domestic investment in the country.

“The reason is that when a bank will lend to its customers, it will charge an interest rate of +25 percent. You have to realize that to pay installments at +25 percent interest rate, the business has to be earning above average returns and those returns don’t exist in the country,” he added.

He said that the industry is shutting down in quick succession as electricity and gas have become extremely expensive and are not available or reliable.

“In a nutshell, credit to the private sector by banks will be negligible. Working capital will hardly be taken. The domino effect will be that non-performing loan ratio of banks will increase and put tremendous strain on the banking and financial sector,” he added.

He said that “a liquidity crisis is staring us in the face, and we are oblivious to it”.

About the increased power outages in the country, he regretted that the figure fudging virus is slowly spreading from the Ministry of Finance to all other ministries as power generation is reported at 20,600 MW.

“6,300 MW difference between demand and generation is the crippling load-shedding the masses are being subjected to. By admitting to this difference of 6,300 MW, this fascist regime is creating a charge sheet against itself,” he added.

He said that the capacity is there to easily meet the demand and generate 27,000 MW, but the issue is that the fascist regime has been so preoccupied with trying to crush PTI that it forgot about governance.

“The power producers have not been paid, who in turn cannot buy fuel to run their plants to generate power, hence the crippling load-shedding of 12 to 16 hours,” he added.

He said that during the PTI governments, there was no load-shedding on paying feeders which meant 80 percent of the country.

Copyright Business Recorder, 2023