Tanvir Ahmad Sheikh, the President of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), appreciated the decision of the newly appointed Governor State Bank of Pakistan for allowing a grace period of one year in repayment of the Long Term Financing Facility (LTFF) scheme.
On Thursday January 22 a delegation from FPCCI led by Tanvir Ahmad Sheikh, met the Governor SBP to discuss the FPCCI's proposals and recommendations to uplift the economy in relation with the up coming monetary policy. Tanvir mentioned that the Industrial Sector is passing through an extremely difficult time, and the severe crises may further deteriorate the unemployment, poverty and inflation which may lead to the further worsening of political disturbance and the law & order situations.
The extremely high rate of interest compared to the rates when the loans were obtained, the world wide recession, stock market turmoil, political tension on eastern borders and drastic deterioration on western fronts have jointly hampered the industry and business sector in Pakistan. If prudent steps are not taken, the industrial crises may collapse the entire economy and un-repairable losses may be occurred. In this context the recovery of loans and interest from the industry will make the crises more severe.
He further added that we have noted that SBP has been using tight monetary policy to control inflation since last year but inflation has been rising continuously. In Pakistan, the nature of inflation is not demand pushed inflation, which can be controlled through tight monetary policy. It is supply side phenomena. The SBP has increased 200 basis points in discount rate since last year.
The discount rate was 9.5 percent at the end of July 2007 and rate of inflation was 7.8 percent. It was raised by 50 basis points on 31 July 2007 (10 percent), on 1st February 2008 SBP further raised 50 basis points to 10.5 percent while the inflation had also increased by one percent and reached to 8.8 percent and lastly on November 12, 2008 SBP raised discount rate by 200 basis points and rate of inflation was 24.6 percent.-PR
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