The business community has hailed the 25 basis point cut in the benchmark interest rate bringing it down from 6 per cent to 5.75 per cent and termed it a positive move as it will be instrumental in reducing cost of credit for the private sector and spurring economic activities in the country.
Islamabad Chamber of Commerce and Industry President Atif Ikram Sheikh while addressing a meeting at Islamabad Chamber of Commerce and Industry on Monday said the country has already missed the economic growth targets for the current financial year by a wide margin.
He hoped that cutting policy rate to over 40-year low would support the economy to perform better. He said the low policy rate has a direct impact on industrial growth as it reduces the cost of production and provides credit to private sector at affordable cost. Therefore, this move should help the private sector in reviving the economy.
Sheikh said that our textile exports have declined by 7.68 per cent 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 of last fiscal 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.
However, he was optimistic that historic cut in benchmark interest rate will 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 is that the local industry failed to invest in modernisation and diversification to explore new exports avenues.
The businessmen said that the industry is accounting for 9 per cent of GDP and more than 60 per cent of exports, however, it is facing liquidity crunch on account of delay in export refunds of about Rs 50 billion by the FBR due to which the exporters are losing competitiveness in the international market.
They urged that the FBR should ensure timely clearance of refund claims to facilitate the exporters which will help them in overcoming liquidity issues and reviving exports of the country.