Islamabad: Jahanara Wattoo, Vice President of the Pakistan Business Forum (PBF), has explicitly informed the government that after the 100 basis point increase that was made, now no commercial bank will lend to the private sector for less than 23.5 to 24 percent.
Wattoo questioned the country’s monetary policy, noting that the interest rate has been raised by 11.25 percent in a short period of 14 months without making the intended progress toward reducing inflation; He also questioned, “What will the failure look like to move the government for a course correction look like if that is not the governance and regulatory failure?”
In its most recent report on Pakistan’s economic situation, which was released on April 4, 2023, the vice president of the PBF drew attention to the fact that the Asian Development Bank (ADB) only projects 0.6% economic growth for FY23; Furthermore, the IMF-imposed recessionary, contractionary, and regressive monetary policy is directly responsible for this gloomy economic outlook; which has made it harder for businesses to get financing.
She also said that exports are going up because, in March 2023, the number of exports fell by 14.76 percent year-over-year for the seventh month in a row. He went on to say that the FPCCI is worried about the two major industries where the government should have focused on growing export earnings: textiles, which have dropped by 11% and IT and ITeS, by 3% each year, and textiles alone can lose up to $3 billion or 15% each year.
In a similar vein, the PBF Advisory Board has reiterated its position that Pakistan’s current policy rate of 21% is significantly higher than that of regional nations; including Bangladesh, China, and India, where the policy rates are 2.75 percent, 6.5%, and 6%, respectively.
Pakistani inflation, on the other hand, appears to be deeply rooted, primarily as a result of significant exchange rate depreciation, unprecedented increases in international commodity prices, multiple rounds of energy tariff increases, and other IMF-mandated measures. Inflation remained stubbornly high and further surged as a manifestation of an utter failure of the monetary policy between February 2022 and April 2023, despite the progressive and significant increases in policy rates of 1125 basis points from 9.75 percent to 21%.
