ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) has urged the government to bring down the key interest rate to a single-digit level so that business activities could be revived in the country.
In a statement issued on Monday, ICCI President Ahmed Hassan Moughal said owing to high-interest rate, the cost of production has increased manifold, causing a slowdown in business activities and a halt in new investments.
“Businessmen need borrowings from the banks in order to expand their existing businesses and to invest in new start-ups, but the policy rate of 13.25pc has made bank borrowing very costly for them,” he maintained.
Moughal observed that whenever interest rate went up, banks preferred to invest in government securities instead of providing credit to private sector “and the same was happening right now in Pakistan”.
He said that the incumbent government also financed the bulk of fiscal deficit through borrowings from the central bank due to which inflation shot up a tight monetary policy was adopted throughout the year to check inflationary pressures.
“But this approach crowded out the private sector from the credit facility,” he said. “Due to this factor, the performance of all major industries during 2018-19, including food, beverages, petroleum, pharmaceuticals, chemicals and automobiles, remained in negative while the growth of SMEs also suffered.”