LAHORE: The Lahore Chamber of Commerce and Industry (LCCI) has urged the State Bank of Pakistan (SBP) to announce for the crisis-hit industrial sector a drastic cut of at least three per cent in the discount rate.

A cut of 50 to 100 basis points would not be doing any service to the challenged economy, said LCCI President Ijaz A Mumtaz in a statement here on Wednesday.

Urging the SBP to announce at least 300 basic points cut in the discount rate, he said the step would give jumpstart to economic activities in the country.

“This initiative will not only make the Pakistani products competitive in the international market as fluctuation in discount rates controls the industrial input cost but also prove to be a big relief for the industrial sector feeling the heat due to various internal and external challenges.

“It should be an eye-opener for the policy makers that Japan, Sweden and Switzerland are aiding their industrial sector at zero per cent discount rate, compared to Pakistan.

The SBP has to bring down the interest rates keeping in view the ground realities and strict competition in the international market.

The ongoing economic scenario shows that there is hardly any time left for country’s economic managers and they all should understand well that a 50 to 100 basis points cut will be too little,” he said.

High discount rate, said the LCCI president, has been causing a great harm to economy and is no more sustainable. “It will continue to do so unless and until a realistic approach is adopted. It is very unfortunate that we have failed to learn any lesson from the tighter monetary policy stance adopted by the SBP in the yesteryears.

Published in Dawn January 15th , 2015

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