High interest rates blamed for Rs7tr hike in national debt

Pakistan’s domestic debt is estimated to have shot up by more than Rs7 trillion since January last year just because of an increase in the State Bank’s policy rate from less than 10 per cent to 22pc, a Senate panel was told on Wednesday. The Senate Standing Committee on Finance also sought separate reports from the State Bank of Pakistan (SBP) and the Federal Board of Revenue (FBR) over Rs69bn worth of trade-based money laundering through the import of solar panels by some companies. At the committee’s meeting, presided over by Senator Saleem Mandviwalla, some senators criticised the SBP for high interest rates in the country, insisting that they were fuelling inflation and failing businesses. On its part, the central bank defended the interest rate hike as a tool to curb inflation. The Senate panel finally directed the SBP to submit a detailed report in this regard. Discussing the high interest rate and its impact on business people, Senator Zeeshan Khanzada said the unreasonable increase in interest had made it difficult for businesses to sustain, let alone contribute to growth.