KARACHI: Chief of the North Karachi Association of Trade and Industry (NKATI) Faisal Moiz Khan has appealed to Finance Minister Miftah Ismail and State Bank of Pakistan’s (SBP) governor to reconsider the recent decision to raise interest rates, and urged them to bring down the rates to single digits.
In a statement, NKATI president expressed fears that if the government did not provide incentives and facilities to industries, productive activity would be severely hampered, leading to the spectre of rising unemployment.
Faisal Khan asked why in times of economic crises the interest rate was raised first but other alternative and effective measures to get the economy out of the woods were not considered.
The government should understand that if industries functioned properly then the country would develop and there would be ample employment opportunities, he said. How would the economic crisis go away if barriers are created for industries?
“The government should formulate an economic roadmap and find solutions to the problems in consultation with the business and industrial community,” the NKATI chief said.
Describing the recent increase in interest rates as detrimental to the country’s exports, he said, “Given the current political turmoil and severe economic crisis, economic policymakers should work on strategies to facilitate the business and industrial activities.”
Otherwise, he said, the economy would be destroyed and industries shut down, which would not only increase unemployment but also create law and order problems. Therefore, decisions need to be taken in the best interest of the country to restore the confidence of traders and industrialists and also to promote foreign investment.
Economic and financial analyst Ateeq Ur Rehman said the SBP announced its Monetary Policy that hiked key policy rate from 12.25 to 13.75 percent without consulting the business community. This increase in the rate would make access to financing more difficult for SMEs, Micro Finance beneficiaries and Leasing/ Modaraba customers.
The Foreign Direct Investment has gone down to 73 percent with such rates; therefore the Fresh Investments might retreat from the scenario altogether.
He added that there were expectations of negative impact on Large/ Small Scale Manufacturing owing to growing cost of import of raw materials, petroleum products, LNG, coal, etc, thereby increasing the cost of production and cost of doing business further.
Copyright Business Recorder, 2022
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