The LCCI concerned about 2.5 percent increase in markup rate
The Lahore Chamber of Commerce and Industry (LCCI) raised worry on Friday about the State Bank of Pakistan’s 2.5 percent rise in markup rate, claiming that the move will have an impact on businesses.
LCCI President Mian Nauman Kabir said in a statement that a 2.5 percent hike will hurt all sectors of the economy. To promote fresh investments, he requested the SBP to reverse a significant jump in markup rates and reduce them to a single digit. He claimed that raising the markup rate would stymie the process of industrialization and growth in the private sector.
He believes Pakistan should bring its markup rate in line with the rest of the region.
Mian Nauman Kabir believes that the country’s monetary policy should encourage industrialization. Unfortunately, successive administrations have tried to control inflation by raising interest rates in the past, he added, adding that this policy has failed horribly. Instead of containing inflation, this policy of raising interest rates has resulted in the country’s rapid de-industrialization, resulting in negative GDP growth.
“The 12.25 percent markup rate is significantly higher than other economies in the region” (India 4 percent , Bangladesh 4.75 percent , China 3.7 percent and Sri Lanka 5 percent ). It means that, in comparison to other countries in the region, Pakistan’s access to credit, which is critical for the industry’s expansion, is already more expensive. In Pakistan, the private sector has limited access to credit.
