Industry slams policy rate hike

KARACHI: Trade and industry opposed the upward revision of 50 basis points (bps) in discount rate by the State Bank on Wednesday.

Industry leaders said that the business community had been asking the successive governments for long to keep the policy rate within single digit, but the latest increase was disappointing and against the interest of trade and industry.

All Pakistan Textile Mills Association (Aptma) chairman Yasin Siddik said that SBP’s move to bring the mark-up rate into double digit would be detrimental for the grappling economy and further erode the competitive advantage of country’s industry.

He said the hike would create difficulty for the industry which was already braving losses on high cost of energy and other crises.

The SBP revised the key policy rate upward by 50bps from 9.50 per cent to 10pc. Industry leaders believe that these policy rate increases were adding to the cost of production and making the country’s exports uncompetitive in the world market.

Pakistan Apparel Forum (PAF) chairman M Jawed Bilwani said that by raising the discount rate alone the inflation could not be controlled particularly when the government itself was a major borrower.

He said that official figures disclosed that private sector borrowing remained much below the required level and this was resulting in job losses as no fresh investment was coming in and existing industries were running much below the capacity.

Mr Bilwani said that high discount rate means costlier borrowing from banks and this directly had adverse impact on investment, industry and general masses.

He apprehended that with double-digit discount rate one should not expect that new investment would be coming and it was badly needed to create new jobs for the youth.

This means that the government was encouraging people not to invest their funds in trade and industry but put them in banks and get high mark-up, he said, adding that this would have disastrous results as job market would shrink further and joblessness would increase.