APBF backs SBP policy rate cut as private capital inflows are weak yet
(APBF PR: May 23th, 2016) – With weaknesses in private capital inflows continue to persist, the All Pakistan Business Forum (APBF) President Ibrahim Qureshi on Monday supported the Central Bank’s decision to cut policy rates by 0.25 % to spur growth, saying the decision would infuse confidence in the business community and propel economy which was hostage to the past policy of austerity.“The businessmen welcomed the SBP’s decision of cutting interest rate by another 25 basis points to 5.75%, as the rate cut would help boost private sector growth.” However, he complained that lending to private sector by the commercial banks during the last 10 months of current fiscal year has not picked up pace.Qureshi said the State Bank governor deserved appreciation for bringing down the interest rate to 5.75%. He also called for steps to fight energy crisis, security challenges and political instability to make interest rate cut meaningful and result-oriented.Ibrahim Qureshi said that the decision reflects coordination among important institutions but reduction in interest rate will not serve the purpose unless the pace of reforms is increased. He called for supporting large scale manufacturing and credit to the private sector which is sliding, stopping flight of capital, improving tax machinery and curbing speculation of different sectorsSome eight years back in 2007, banks were providing 67 per cent credit to private sector which has fallen to just 37 per cent by 2014, he said. He added as per monetary policy statement January, banks provided total credit of Rs 224.5 billion to private sector during the first half of current financial year as compared to Rs 325.8 billion during the same period of last year which again shows banks’ declining supporting role to private sector.
