High mark-up rate harmful to economy: MCCI

RECORDER REPORT

MULTAN: Local business community on Friday expressed concern over high mark-up rate, saying that it would hurt the national economy.

President of Multan Chamber of Commerce and Industry (MCCI) Mian Anis A Sheikh urged the State Bank of Pakistan (SBP) to bring down the main interest rate to single digit in the upcoming Monetary Policy scheduled to be announced on August 10.

He said that bank spreads should also be decreased to a reasonable level.

Sheikh said that the central bank should stop lending to the government above the previously set limit because excessive government borrowing was one of the main reasons of runaway inflation.

According to him, the SBP was preparing monetary policy “without studying the nature of inflation in Pakistan”, adding that it was not fuelled by demand that could be controlled through a tight monetary policy.

He said the central bank had failed to control inflation in the country by increasing discount rate.  He said that the highest priority of the SBP at this point in time should be making funds available to the business community at cheapest possible rates, adding that it was necessary to bolster industrialisation in the country, besides arresting the fast increasing unemployment rate.

Over the past two years, he said, interest rates in Europe and the United States had been brought down near to zero level to save economies from collapse. He said that a cut of 50-100 basis points would not be doing any service to the dwindling economy.

Terming the current high level of discount rate non-sustainable, he said that it had been harming the national economy and would continue to do so unless a realistic approach was adopted.

Over the past few years, he said, the domestic private sector had suffered several setbacks because of higher cost of doing business. Investment, he said, in new industrial projects and expansion in existing industry had come to a standstill.