RCCI Urges State Bank to Reduce Policy Rate

The Rawalpindi Chamber of Commerce and Industry (RCCI) has expressed regret over the State Bank of Pakistan’s decision to maintain the monetary policy rate at 15 percent. In a statement, RCCI President Saqib Rafiq said that the business community was expecting a reduction in interest rate so that the wheel of the economy can run. “Bringing the policy rate down to single digits can be very helpful in reviving business activities and turning around the downward slide of the economy amid the prevalent challenging times,” he said. The policy interest rate in neighboring countries is in single digits with India’s policy rate at 5.90 percent, while the policy rate in Bangladesh is at 5.75 percent, he said. Rafiq said that the cost of production has increased many times due to inflation. The high interest rate would increase the credit cost of commercial banks, ultimately having a bad effect on the growth of industrial activities and creating more difficulties for the Small and Medium Enterprise (SMEs) in their effort to revive the economy, he further added. He said that it is difficult to get loans due to high interest rates. As the business of small industries and SMEs depended on credit, he demanded that the decision to maintain interest rates should be reconsidered. He said Pakistan needed a quick revival of business and industrial activities to improve the ailing economy. RCCI chief lauded the finance minister’s announcement of releasing Letters of Credit payments up to $50,000. However, he demanded that demurrage charges should be abolished.