Pakistan policy rate stands highest in the region UBG expresses concern

KARACHI, Nov 28 (NNI): The leaders and members of the UBG have expressed their serious concern over the policy rate hike announced by State Bank of Pakistan.
Commenting on the hike by 100 basis points, the UBG said that the economy already confronted with multiple severe challenges including massive sharp currency devaluation/fluctuation, acute energy shortages, dwindling foreign direct investment, growing fiscal imbalances, rising inflation, unbearable foreign debt and depleting foreign exchange reserve.
According to UBG’s central spokesperson Gulzar feroz The adverse abrupt decision of SBP to make a steep hike of 100 basis points in benchmark interest rate taking it to 16 pc is a harsh measure badly affecting the business activities of all sectors particularly it would hurt the export, UBG added.
Under such tarnishing situation it is very hard for economy to survive and afford this policy rate hike which would play havoc affecting cost of doing business resulting in unemployment as neither local nor foreign investors would put their money at stake, UBG lamented.
While comparing Pakistan policy rate with the other countries of the region, UBG said the policy interest rate was 4.75 in Bangladesh, 3.7 pc in China, 4 pc in India, 0.75 pc in Hong Kong, 0.5 pc in Thailand while in Pakistan it is 16 pc which is the highest in the region and after adding Kibor, the policy rate would swell to 18.50 which would be unaffordable for the borrowers to run their industries and businesses making economic situation highly volatile.
There is need to control rising strength of dollar which is short in market due to which it is very hard to open Letter of Credit. Pakistani products are losing their competitiveness in the world market due to high production costs causing deep crisis to the business community. NNI