Surprise policy rate hike shocks trade and industry

Already struggling for their survival amid multiple economic challenges mainly massive rupee-dollar fluctuation and severe energy shortages, the trade and industry leaders on Friday rejected the State Bank of Pakistan’s move to raise its policy rate by 100 basis points saying it would play havoc with the cost of doing business besides hitting exports hard. Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Irfan Iqbal Shaikh said the business community has rejected a higher-interest rate of 16 per cent and it cannot be termed as a wise decision. He said Pakistan has the highest interest rate compared to Malaysia’s 2.25pc, China’s 3.85pc, India’s 4.5pc and Bangladesh’s 5.5pc. After adding Kibor, the policy rate would swell to 18.50pc. “Who will borrow at this rate and operate their industries?” he asked. The economic situation is highly volatile. The government has failed to control the rising strength of the dollar, which is short in the market. Letters of credit are not opening. The business community is already in crisis due to gas shortages and load shedding. Local products are losing their competitiveness in the world markets due to high production costs. The business community is already in deep crisis, he said.