ISLAMABAD: The Islamabad Chamber of Commerce and Industry (ICCI) on Monday termed cut in interest rate a positive move as it would reduce cost of credit for private sector and ultimately help spur economic activities in the country.

The State Bank on Saturday cut the benchmark interest rate by 25 basis points to 5.75pc from 6pc.

The ICCI meeting pointed out that the country had already missed the economic growth target for the current financial year by a wide margin mainly due to depressing performance of agriculture sector. It expressed the hope that cut in policy rate to over 40-year low would support the economy to perform better.

Addressing on the occasion the ICCI president, Atif Ikram Sheikh, noted that low policy rate had a direct impact on industrial growth as it reduced the cost of production and gave credit to private sector at affordable cost. Therefore, this move should help private sector in reviving the economy, he added.

He said that textile exports had declined by 7.68pc coming down to $10.395 billion during the first 10 months of the current year (July-April) as compared to $11.26 billion during the same period last year.

“This has happened despite the grant of GSP Plus status to Pakistan by the EU, which should be a cause of concern for the policy makers,” he added.

However, he added, the historic cut in benchmark interest rate would help the industrial sector to avail low cost credit for upgradation of technology and machinery as one of the major reasons of fall in exports was that the local industry had failed to invest in modernisation of their manufacturing units and diversify exports.

He noted that the industry was accounting for 9pc to GDP and more than 60pc to exports. However, it was facing liquidity crunch on account of delay in export refunds of about Rs50 billion by the FBR due to which the exporters were losing competitiveness in the international market.

He demanded that FBR should ensure timely clearance of refund claims to facilitate the exporters that would help them in overcoming liquidity issues and reviving exports of the country.

Published in Dawn, May 24th, 2016