Karachi (January 24, 2023) The United Business Group (UBG) described the State Bank of Pakistan’s (SBP) increase in interest rate by one percent to 17 percent in the new monetary policy as having negative effects on investment and economic activities. President of United Business Group, Zubair Tufail, while commenting on the increase in the policy rate by 1200 basis points, said that the increase in the interest rate will destroy the business in Pakistan, which is already sinking into the swamp. State Bank increased the interest rate by one percent. The tax is 17 percent while banks charge two to three percent more, thus the interest rate will be around 19 to 20 percent to the customers. He said that such a high interest rate will prove to be a killer for business and will have negative effects in the national economy, ending people’s daily lives. Zubair Tufail said that currently Pakistan is going through a very critical situation, it has already banned the import of raw materials and instead of immediate release of thousands of containers lying at the port, rhetoric is going on, industries are closing. are going, the country is suffering from severe problems, but it is a pity Zubair Tufail added that there is no possibility of controlling inflation by increasing the policy rate because it is not driven by demand but by supply, the borrowing costs of the business community will increase. An increase in the policy rate will increase the budget deficit, while a one percent increase in the policy rate contributes about 170 billion rupees to the budget deficit. President UBG Zubair Tufail urged the government to withdraw the decision to increase the interest rate as it will have negative impact on the industrial activities in the country, at this time Pakistan is facing an ailing economy. Business and industrial activity need to be revived quickly to improve, but a 100 basis point increase in interest rates would make the cost of debt unaffordable and adversely affect efforts to boost business activity.
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