Interest rate of 13.75pc will not let economy grow: FPCCI

Shabbir Mansha, acting president FPCCI, has said that the interest rate of 13.75 percent will not let the economy to grow and the prices of electricity and gas have already made us uncompetitive as far as the exports are concerned. Additionally, there are rumors that interest rate may be further raised.

He added that the government should also consult with the stakeholders in business, industry and trade on how and when interest rate can be brought down so that, businesses can plan their year ahead accordingly.

Shabbir Mansha noted with a sigh of relief that international oil prices have declined by a considerable 7-8 percent approximately from its peak of $ 123 per barrel to under $ 110 per barrel, which must be passed on to the end consumers in a phased manner.

Shabbir Mansha also pinned his optimism that $ 2.3 billion loans from Chinese commercial banks on favorable terms will put a halt to the depleting foreign exchange reserves and roll over of a few other maturing Chinese debts will provide the government with a solid support to build the reserves equivalent to at least two months of import cover.

Shabbir Mansha apprised that the key lies in controlling the current account deficit to $ 10 to $ 12 billion, which will cross $ 20 billion and more than 5 percent of the GDP. Squeezing the existing taxpayers even further, limiting commercial activities and re-imposing petroleum development levy (PDL) to woe IMF will not lead us anywhere, he added.

He welcomed the near-certain resumption of International Monetary Fund’s Extended Fund Facility (EFF) programme for Pakistan with cautious optimism as it may unlock the stabilisation of exchange rate and pave the way for major external funding programmes for the fiscal year 2022-23 from the World Bank and Asian Development Bank (ADB) – provided the government utilizes this breather to bring down inflation and interest rate through prudent fiscal and monetary management.

He emphasised that imposition of PDL – though in a phased manner – will totally destroy the cost of doing business competitiveness and will fuel the inflation like never before through its multiplier effect. He demanded that the government should take business community on board on its commitment with the IMF on PDL.

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