Lahore Chambers of Commerce and Industry (LCCI) have rejected the increase in policy rate by the State Bank of Pakistan in its latest policy statement. The State Bank of Pakistan has increased the policy rate to 16% in order to fight inflation in the country. Businessmen, however, like the LCCI members, have said that increasing the interest rate is having negative effects for the overall business environment of the country. They said that because of the hike in interest rates, cost of doing business is increasing along with borrowing for new investment ventures.

They said that this hike will further dampen the prospects of increasing exports of the country.LCCI President Kashif Anwar said that we are expecting a decrease in the mark-up rates. “This decision by the monetary policy committee has left us dismayed. Chapter 84-85 are already causing problems for us and now this increase in the policy rate.” He continued, “we do not doubt the intentions of the government but every step it takes is taking the business and industry in the opposite direction. This latest hike has increased the borrowing cost to its highest point in the last six years.”

He asked, “how will our industry compete with France, Germany, Spain, Austria, Ireland, Japan and various other countries where markup is zero or even below zero.” He demanded that mark-up rate should be set at single digits to give a boost to the economic activities and to ensure affordable financing for industrial sector. He claimed that it has been severely harming the economy and will continue to do so unless and until a realist approach is taken. He called a high markup rate “unsustainable.”

Credit : Independent News Pakistan-WealthPk