LAHORE - Country's economic growth is crawling to a halt due to the interest rate, almost highest in the world, thanks to the government which is more than willingly to accept this hidden condition of the International Monetary Fund, pushing the industrial sector on the verge of collapse. Economists said the country is in the clutches of IMF due to which the government is helpless to cut down the discount rate. On the other hand, the businessmen and industrialists blasted the State Bank of Pakistan for keeping the discount rate up and demanded to immediately cut it down to save the industry from a total collapse. Sources said the SBP had given green signal to the government that the discount rate might be cut down but the helpless government could not do so until it is allowed by the Fund. The SBP had increased its discount rate by 200 basis points, to 15 percent, which is the highest discount rate in the world. The government is waiting for the approval of the IMF to cut down the interest rate. The Fund's delegation is visiting Pakistan this month to review the implementation on its programme. The government will take up the issue with the IMF team during their expected visit, and if got a nod from them, the government will be able to cut down the discount rate, economists revealed. On Saturday, the SBP announced to freeze the discount rate at the previous position (15 per cent) and made it clear to the stakeholders that the discount rate could not be brought down. Experts also dispelled the impression given by the SBP that inflation could be controlled with increase in the interest rate. "Inflation has nothing to do with the interest rate," they opined. They said mark-up rate is always increased on the pretext of high inflation whereas controlling inflation is not the job of industry, rather it's purely a task of central bank, which is playing the role of a silent spectator instead of taking concrete measures. Economists said the so-called people-friendly PPP government is helpless as far as cut in the discount rate is concerned. "Pakistan is in the clutches of IMF due to which the government is helpless to cut down the interest rate," former advisor to PM on finance Dr Salman Shah said. He said it seemed that it (high mark-up rate) is one of the hidden conditionalities of the IMF. "The hands of the government are tied and they are helpless. Otherwise, it was a good time for the government to cut down the interest rate when the inflation index is coming down following sharp decline in the prices of petroleum products and other goods and commodities in the international market," he maintained. Dr Shah said the government has failed to notice that due to high discount rate, the industry is bound to collapse in near future. However, he said the government would have to announce a relief for the industry in the next couple of months to avoid a total collapse. Prof Dr Khawaja Amjad Saeed, principal of Hailey College of Banking and Finance, said the government should cut down its lavish expenditures to meet the fiscal and current account deficit instead of maintaining high mark-up. "High mark-up rate badly affects the economic growth particularly the industrial growth. High interest rate also multiplies the production cost, which is very dangerous for the industry. We are unable to understand why the government is totally ignoring the industrial sector and running after only agricultural sector," he added. Unfortunately, we don't have a comprehensive economic policy, he said adding that there is a total uncertainty in the country's economic sector due to high mark-up. Dr Khawaja further said the former governor State Bank used to claim, time and again, that the tight monetary policy would improve the economic situation in the country but it proved only a futile exercise. Tight monetary policy is no solution to economic problems, he maintained. According to government's agreement with the IMF, the country was bound to increase interest rate. "The programme envisages a significant tightening of monetary policy. To that end, the SBP recently increased its discount rate by 200 basis points, to 15 percent. Following this first step, interest rate policy will be sufficiently flexible to protect the reserves position, bring down inflation, and allow the government to place T-bills and other securities with commercial banks and non-banks in order to avoid further central bank financing of the budget." Meanwhile, the Lahore Chamber of Commerce and Industry has urged the central bank to immediately announce cut in interest rate, which is a prerequisite to enhance productivity. In a joint statement soon after the announcement of monetary policy, the LCCI President Mian Muzaffar Ali, senior Vice President Tahir Javed Malik and Vice President Irfan Iqbal Sheikh said the SBP decision to keep the interest rate intact has dashed the hopes of the business community, which was expecting a remarkable cut in the existing rate of mark-up. The LCCI office-bearers said it is a sorry state of affairs that at a time when the whole industry was badly suffering due to high cost of doing business and complaining of being uncompetitive in the global market, the SBP has taken a totally unwise step. They said the monetary policy announced by the State Bank Governor would not bring any good to the economy but would further deteriorate the situation. They were of the view that imbalances in economy such as increasing trade deficit, current account deficit, high saving and investment gap, huge government borrowing and persistent high inflation including food inflation would leave a very negative impact on the national economy. It is interesting to note that at the moment when the interest rate is showing a downward trend in most of the developed and developing countries including US (0.25 per cent), UK (1.5 per cent), Canada (1.5 per cent), Australia (4.25 per cent), Japan (0.1 per cent), China (5.58 per cent), India (5.5 per cent) and Bangladesh (7.61 per cent), the discount rate in Pakistan jumped from 13.5 per cent to 15 per cent in November 2008, which is putting a very negative impact on our industrial sector.