The government needs to revisit its current policy of heavy reliance on borrowing from the external and domestic commercial sectors, said Ateeq Ur Rehman, advisor banking KCCI.
Commenting on monitory policy, Rehman said it is a good sign to uplift the financial problems of economy which the State Bank of Pakistan announced keeping the rate unchanged 5.75 percent.
It was necessary owing to biggest economic issues faced by the country like decline of exports by more than 12pc due to overvalued rupee, remittances are still on declining, imports are on rise, the current account deficit has substantially increased, the current level of the external account is also worsening, FDI is falling, unemployment remains relatively high and impact is growing of the borrowed money which requires heavy debt servicing, etc.
The economy is under great deal of stress, banks increased their advances 144 percent and government was the major borrower, which hurt lending to the private sector except for improvement in bank advances particularly for infra structure projects.
SMEs are still starving for access to finance, despite their economic significance, they are still unable to receive their due share from financial institutions as SME finance portfolio and capacity to finance is missing from Banks. For SMEs benefit which need liquidity to do the job, it was suggested to maintain the monetary policy status quo for another 2 months.
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