MULTAN, Oct 27 (APP):Multan Chamber of Commerce & Industry (MCCI), President Dr Muhammad Shafiq Patafi,
on Tuesday demanded the State Bank of Pakistan (SBP) to withdraw 50 basis points
announced in Monetary Policy Committee (MPC) meeting.
In a statement issued here, Dr Patafi said the SBP itself had acknowledged that the main
drivers of inflation were rising prices of electricity, gas, oil and wheat. “This is a supply-side
issue, not a demand-side one, so raising the interest rate will not bring down inflation but
will make doing business costlier,” he said.
He endorsed the stance of Federation of Pakistan Chambers of Commerce & Industry (FPCCI)
and the wider business community that 12 percent rate was far higher than in other regional
countries and was pushing local industry out of the competition.
The MCCI president said the economy of South Punjab depended on agriculture and allied
industries, and the region would therefore bear the heaviest cost of the decision. The cotton
season was at its peak, and ginning, spinning and textile units needed the most working capital
of the year during these days, he said. Costlier credit would first hit the purchase of cotton
from growers, he added.
He said wheat sowing was also around the corner. Farmers depended on loans for fertilizer,
seed and diesel, and expensive credit would reduce output, ultimately pushing up flour prices
further.
Dr Patafi added that the decision would also raise the cost of processing and exporting
mangoes and other agricultural commodities, making Pakistani goods even more expensive
in international markets. Small and medium enterprises in the region were already struggling
to access bank loans, and the new rate would narrow the path to fresh investment further,
he said.
He urged the government and the SBP to reverse the latest increase and bring the interest
rate down gradually to single digits. He also demanded that farmers, ginners and flour millers
be provided working capital at concessional rates during the cotton and wheat seasons, and
that South Punjab receive its due share in export refinance and long-term financing schemes.
He said that if inflation was to be controlled, energy should be made cheaper and agricultural
supply chains improved.
The MCCI president said the chamber would devise a joint strategy with other South Punjab
chambers and the FPCCI. The next meeting of the Monetary Policy Committee was scheduled
for December 14, and the chamber would send its detailed proposals to the SBP before that,
he concluded.
Source: APP (Associated Press of Pakistan)
