LAHORE: Chairman All Pakistan Textile Mills Association (Aptma) Mohsin Aziz has welcomed cut in discount rate by 150 bps by the State Bank of Pakistan (SBP) and termed it a good omen for investment and growth in the country.

He said it is a positive move towards the right direction and needed to be continued further until the lending rate drops down to single digit. Mohsin said that the lending rate has practically come down to four percent in the region and similar approach is needed to be followed in Pakistan.

Chairman Aptma expressed his deep gratitude to the Governor SBP and his team for extending a patient hearing to the Aptma submissions during his visit to the Aptma. He said that it is now a proven fact that impact of credit off take in developed countries is entirely different from the under developed countries. The credit off take increases when lending rates are reduced that pushes the prices up in the developed world. But there is no significant upward change in prices of essential items in underdeveloped countries, as inflation rates remain under control in countries like Pakistan with increase in productivity, he stressed.

Mohsin has further added that Pakistan economy is plagued with cost push, and not demand pull, inflation will therefore increase and discount rate would not serve the purpose. Instead, he said, there is need of keeping discount rate to support investment and growth to arrest the cost push inflationary pressures. He cautioned that the government off take should not increase from a certain limit in order to make surplus credit available to the private sector for investment and growth.

Chairman Aptma has expressed the hope that an impetus to investment and growth would have positive impact on national economy and hoped that interest rate would come down more to kick start industrial activities in the country.