Businessmen Panel of Federation of Pakistan Chambers of Commerce and Industry has apprehended that increase in key policy rate by 25 basis points to 10.25 percent effective from 1st February 2019 touching six-year high will bring the economy to a standstill.
Talking with Business Recorder here on Friday, BMP Secretary General (Federal) Ahmad Jawad said the increase is above the financial market expectation because central bank had already increased the policy rate by a cumulative 4.5 percentage points since January 2018. Elaborating his point, Jawad said, "I believe the hike in the interest rates was an unnecessary move. Inflation numbers were reasonable. The government had already taken some administrative measures and made exchange rate adjustments to curb unnecessary imports. It had already implemented fiscal consolidation measures. The domestic economy will come to a standstill in response to increase in interest rates."
However, he added that the future course of the monetary policy will be depending on how the economic conditions unfold and when and how the government moves in the bailout negotiations with the IMF."
The BMP Secretary General (Federal) termed the Pakistan Banao Certificates with a high profit rate of 6.25% & 6.75% for 3 & 5 years investment as the good legal tender for Overseas Pakistanis and a good initiative by Prime Minister Imran Khan which may also help reduce the current account deficit. Jawad said that these Certificates will generate foreign exchange for the socio-economic development of the country. The true minimum investment size is $5,000 with no upper limit. The overseas Pakistanis, having a CNIC, Nicop or POC and maintaining their bank accounts abroad, can invest in Pakistan Banao Certificates digitally through a dedicated secure website which is a good attraction and initiative by the Government for our expats.
On the issue of POL prices, he said we expected some relief for the common man and for agriculture sector in terms of reducing HSD prices but the announcement of government to decrease in petroleum prices; which are very minor, in other words no change. Despite Oil and Gas Regulatory Authority (Ogra) recommendations for Rs4.68 per litre decrease in high speed diesel (HSD), which is used in trucks and buses and agriculture tube wells but the government regrettably didn't approve the proposed reduction.