Our staff reporter
The industrial associations, opposing central bank’s tight monetary policy stance, observed that industry was already confronted with an issue of persistent increase in the cost of doing business for the last few years, primarily driven by power outages and poor law and order situation.
“Debt servicing has now become a major component of cost for cement industry as even after interest rate cut in past, the effective bank markup for the industry is still above the regional countries markup rate. The cement sector’s representatives have appealed the authorities to provide some specific interest rebate to the industry to keep it afloat.
“The input cost has increased sharply in the last decade and there is lack of mechanism to pass on this burden to end consumers”, industry stakeholders said. Due to all these challenges, the production capacity of the cement sector has reduced to the lowest level of the last decade, they said. The manufacturers are worried by the stagnant domestic demand of this fiscal and continuously declining export. With a view to rejuvenate the economy the industry wants the State Bank to bring it to a single-digit.
Prgmea Chairman Ijaz Khokhar observed that for government, cut in discount rate means decrease in the debt servicing cost, as it is the biggest borrower. He said that the availability of cheaper liquidity to textile industry is the need of the hour, as the central bank’s tight monetary policy in the name of financial discipline caused irreparable dent to the private sector growth and brought in an unusual surge in unemployment, he said. “Neither any industrial expansion took place nor any investor put money in any new business venture. And one of the reasons was unavailability of cheaper money to the private sector.”