A majority of local businessmen termed the State Bank's monetary policy unfriendly for the business community and stressed that central bank should adopt alternative measures to arrest the rising inflationary trend in the country.
Traders believe their businesses will be jolted by the enhancement of discount rates from 12 to 13 percent and that the monetary policy will fail to counter inflation. President, Multan Chamber of Commerce and Industry (MCCI), Khawaja Muhammad Jalaluddin Roomi believed that the import of raw materials will become more expensive for local industrialists, who already suffer from high tariff rates on natural gas and electricity in addition to rising petrol prices.
He said machinery imports by various sectors would also be affected as the constant depreciation of the rupee makes them more expensive. Roomi also mentioned that the country had the highest interest rates in the region and that this would have an adverse affect.
The MCCI President sees the country's leading export sectors becoming weaker on the global markets. "Once a market is lost, its not easy to regain a lost market share," he added. Roomi was critical of the government's export target of US $22.1 billion for 2008-2009, saying it seems very hard to achieve it in the existing situation.
A renowned industrialist in the textile sector said that instead of countering inflationary pressures, the monetary policy would dent the country's export sector, resulting in a decline of foreign exchange reserves. He believed that the impact of high interest rates upon the textile sector would not bode well for exporters.
"The central bank's policy has been discouraging for country's export sector since last year. On the other hand, the borrowings of the government from State Bank of Pakistan (SBP) is increasing unabatedly," the industrialist lamented. President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), Mian Tanvir Ahmed Shaikh said that the central bank has raised discount rates in its past monetary policies, but these moves failed to stop inflationary pressure. "The SBP should focus on reality rather than rhetoric," he added.