Central Chairman All Pakistan Textile Mills Association (APTMA) Ahsan Bashir expressed dismay over the negligible cut of 50bps in the discount rate by the State Bank of Pakistan (SBP), saying that this sluggish response to APTMA demands of cutting it by 350bps that would cost Pakistan economy heavily.
Reacting to the latest cut of 50bps to 10 percent in the Monetary Policy by the SBP on October 5, Chairman APTMA apprehended that the threat of disinvestment would be looming large to hit badly the GDP growth in the country. According to him, APTMA has been advocating for reduction in the interest rate to 7 percent, in line with the regional competitors to control the growing pace of Non-Performing Loans (NPLs) reaching Rs 652 billion at present.
It would be too little, too late when the government would match the average regional interest rate of 7 percent, he added. Ahsan said a high interest rate has already been stagnated the credit off-take of the large scale manufacturing sector, stuck up to Rs 1.3 trillion in August 2012 comparing with the corresponding period. He said an earlier cut of 350bps during last two quarters had provided a breathing space to the manufacturing sector.
However, the SBP has disappointed the businessmen community and more capacity closures would be on the cards ahead. Already, he added, the production capacity is down by 30 percent due to high mark up and unprecedented energy shortage. Ahsan said there is an urgent need of an investment of Rs 100 billion to create one million jobs in the country. The government review the latest cut in discount rate and direct the SBP to bring it down further by another 300bps to support the industrialisation in the country.