KARACHI: Business and industrial community has termed the policy rate increase by 300 basis points totally unacceptable, policy rate, and rising dollar value will be the last nail in the coffin of the ruined economy and demanded that the series of damage to the economy should be stopped.
President Karachi Chamber of Commerce & Industry (KCCI) Mohammed Tariq Yousuf, while expressing deep concerns over continuous devaluation of rupee against dollar which reached a new all-time high of Rs285 by appreciating abruptly by Rs18.89, urged the State Bank of Pakistan (SBP) to play its role and devise effective strategy to bring dollar value down as devaluation of rupee was having a deep negative impact on the economy, businesses and the inflation.
President KCCI said that the State Bank’s announcement to raise policy rate by 300 basis points is totally unacceptable which would discourage borrowings. “Businesses are not even in a position to make 25 percent profit nowadays in the prevailing situation.
Who is going to go for borrowing at such exorbitant rates? This step would discourage industrialization, nurture inflation and create more problems for the economy,” he added in a statement issued.
He said, “Although the experts are attributing the rupee devaluation to monetary policy but the SBP, being the regulator, has to play a role to find out the causes of abnormal upsurge and bring it down at any cost as it was totally unacceptable at the current inflated level otherwise, rising dollar against rupee would keep on creating numerous problems for the economy which is sinking as it faces a lot of challenges due to widening current and fiscal deficits.”
Tariq Yousuf said that appreciating dollar against rupee along with high energy tariffs were raising the cost of doing business, making Pakistani goods uncompetitive in the export markets and unaffordable for common man at the local markets as the impact of rising dollar value is usually passed onto end-users which was clearly visible in shape of exorbitantly high charges of petroleum products and also the skyrocketing energy tariffs.
He was of the view that devaluation of rupees against dollar has reached to a level where it has become unbearable, terribly raising the cost of doing business and fostering the inflation, therefore, it is really crucial to review the current strategies being pursued by the regulator.
“Due to lack of effective price control mechanism, an abnormal upsurge has been witnessed in the prices of almost all the commodities of household usage which have to be controlled to ease the already overburdened and miserable life of the inflation stricken common man”, he stressed.
President KCCI feared that the economic crises including energy crises, devaluing rupee against dollar, very high interest rates would push the economy to a point of ‘no return’ and may even put Pakistan’s survival at stake.
He urged that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the excessive devaluation would prove detrimental for the economy and the businesses by affecting the industrial performance, raising unemployment and making the inflation genie uncontrollable, particularly for the middle and lower segments of the society, besides making the already poor poorer.
President of Korangi Association of Trade and Industry (KATI) Faraz-ur-Rehman expressed serious concern about the State Bank increasing the interest rate by 3 percent to a level of 20 percent and the dollar price in the interbank market exceeded the new historical high of 285 rupees.
He said that there are reports of the IMF’s condition to bring the value of the dollar equal to the Afghan border rate, and accepting the condition of raising the interest rate would bring the economy to the brink of collapse.
President KATI said that the IMF is increasing their conditions day by day and the rising interest rates and the value of the dollar will be the last nail in the coffin of the crippled economy.
Faraz-ur-Rehman demanded that the series of decisions that threaten the security of the country should be stopped.
He said that the decision to increase the interest rate in the current crisis is not wise. With industries closing down and businesses heading for recession, further increases in monetary policy would be disastrous.
Faraz-ur-Rehman said that the current situation will cause a storm of unemployment and a flood of inflation, which leads to an expectation of increasing crime. Investors will prefer to keep money in banks and earn interest, while the poor will suffer from unemployment and an inferiority complex.
President KATI demanded Prime Minister Shahbaz Sharif, Finance Minister Ishaq Dar and Governor State Bank Dr Jameel Ahmed to reconsider the decision and save the country from destruction.
In such difficult situations, the industrialist and investor will have no other option but to close the industries.
Copyright Business Recorder, 2023