KARACHI: President FPCCI, Irfan Iqbal Sheikh has expressed his profound disappointment over maintaining status quo in key policy rate by the State Bank of Pakistan in its latest Monetary Policy Committee (MPC) meeting and keeping it unchanged at 21 percent.
The country needs proactive policymaking to ward off the impending total economic collapse; and, not maintaining the status quo – as maintaining status quo is the easiest route for policymakers, he added.
Irfan Iqbal Sheikh stressed that the policymakers must be aware that commercial banks are not lending to the private sector for less than 24 percent, thanks to 21 percent key policy rate in the country. Therefore, access to finance is non-existent for the industry in the country – for all practical purposes of affordability and repayment capabilities at that rate.
It is pertinent to note that inflation in Pakistan is evidently deep-rooted and it mainly stems from substantial exchange rate depreciation; unprecedented hike in international commodity prices; multiple rounds of hikes in energy tariffs and other forced measures by the IMF.
Irfan Iqbal Sheikh explained that despite the progressive and major hikes in the policy rates by 1,125 basis points from 9.75 percent to 21 percent over the last five quarters, general inflation remained stubbornly-high and further surged to 38 percent in a manifestation of an utter failure of the monetary policy.
The FPCCI chief maintained that despite raising the interest rate counterproductively, progressively and counter intuitively, the country has failed miserably at both the desired objectives: taming inflationary pressures and securing the IMF deal.
Sheikh, as President FPCCI, the apex trade & industry body of Pakistan, has questioned the seriousness of government, on behalf of the entire business, industry and trade community of Pakistan, in bringing transparency & consultation in the economic policymaking; and, has reiterated his stance that the government should provide answers to the two sets of questions for businesses to plan their year ahead: (i) what are the factors or impediments that are hampering the never-so-elusive IMF deal and what the government is doing about it; (ii) what steps will be taken after the resumption of IMF programme to stabilize the economy and how and when the government plans to take the business community into confidence on these steps.
Copyright Business Recorder, 2023
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