LAHORE: The Lahore Chamber of Commerce and Industry, while expressing its surprise over the State Bank’s decision to further enhance the discount rate, has said, it would hit the overall economy hard as the availability of equity to the business community has been made dearer with one stroke of pen.

In a statement, LCCI President Mian Nauman Kabir, Senior Vice President Mian Rehman Aziz Chan and Vice President Haris Ateeq said that State Bank had not adopted a right way of dealing with inflation. The 150 basis points increase in discount rate would jack up the cost of doing business that would ultimately hit the economic growth that had just started showing signs of recovery, he added.

The LCCI office-bearers said the SBP decision would not help curtail fiscal deficit or in controlling inflation as it had not served the purpose in the past rather it would create troubles for the new investors. They said that at that point in time when both the trade and industry were in dire need of some special package, the increase in interest rate would prove only counterproductive to economic recovery.

“The cost of doing business in Pakistan is already highest in the region,” they maintained, adding the business community had been demanding lowering of interest rate for the sake of new investments that were going down with every passing day.

“It would have been a great service to the country in general and to the economy in particular if the State Bank of Pakistan had taken the otherwise decision.” The move was totally against the expectations on business doing community as the ground had been set for cost-push inflation, he added.

They said Pakistani businessmen needed cheaper money as on the one hand it would facilitate him while on the other it would help ensure economic growth, which was at the moment much below the target. The SBP should focus on reducing the banking spread to control the inflation instead of jacking up the discount rate by 150 basis points, they said.

Copyright Business Recorder, 2021