The Lahore Chamber of Commerce and Industry (LCCI) has demanded of the State Bank of Pakistan to bring down interest rate by at least 150 to 200 basis points to revive the industrial sector. LCCI President Ijaz A Mumtaz in a statement on Thursday said the interest rate is vital input for the industrial and always influences the cost of production.
He said "we can not compete the countries like Japan, Sweden and Switzerland in the international market where industry is being financed at zero percent interest rates." He also cited the examples of Austria, Belgium, Canada, France, Germany, Greece, Hong Kong, Italy, Malaysia, Singapore, Spain, Thailand, United Kingdom and United States where interest rates are 0.05 percent, 0.05 percent, one percent, 0.05 percent, 0.05 percent, 0.05 percent, 0.50 percent, 0.05 percent, 3.25 percent, 0.12 percent, 0.05 percent, 0.5 percent and 0.25 percent, respectively.
He said that the benchmark interest rate in Pakistan was last recorded at 10 percent. He said that interest rate in Pakistan averaged 12.55 percent from 1992 until 2014, reaching an all-time high of 20 percent in October 1996, and a record low of 7.50 percent in November 2002.
He said that SBP has to bring down the interest rates keeping in view the ground realities and strict competition in the international market. He said that a cut of 50 to 100 basis points would not be doing any service to the challenged economy. He said that it was very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the SBP in the yester years.
LCCI president said that ongoing economic scenario shows that there is hardly any time left for economic managers of the country and they all should understand well that a 50 to 100 basis point cut will be too little. He said that it is now before all of us that high mark-up rate is no more sustainable. It has been causing a great harm to economy and would continue to do so unless and until a realist approach is adopted, he mentioned.
Mumtaz said SBP should understand that its continued tighter stance is inflicting a very heavy loss on the nation as the economy has already paid a very high price because of high interest rate. He urged the SBP to announce at least 150 to 200 basis points cut in interest rate that would certainly give jumpstart to the economic activities in the country.
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