The industry leaders and financial experts on Saturday lauded State Bank of Pakistan’s decision of cutting interest rate by 100 basis points and said it would help stimulate private sector growth.

All Pakistan Business Forum President Ibrahim Qureshi said the SBP governor deserved appreciation for bringing down the interest rate to 8.5 per cent from 9.5 per cent. Howevr. Ibrahim Qureshi called for measures to overcome energy crisis, security challenges and political instability to make interest rate cut meaningful and result-oriented.

The APBF president said that business community continued to term a considerable cut in policy rate a panacea to low investment phenomenon.

LCCI former vice president Kashif Anwar said the cut would help ensure availability of cheaper money to cash starved private sector besides encouraging the potential foreign investors for investment in Pakistan. He, however, hoped that in the upcoming monetary policy, the interest rates would further be lowered to eight per cent.

Kashif Anwar said that the cut will not only give boost to local investment because of ease in the cost of doing business but the confidence of foreign investors will also go up and they would be willing to put their money in new ventures in Pakistan, the statement said.

Kashif Anwar said the provision of ample cheaper liquidity was a must to create new businesses but in the last five years the higher interests kept the private sector growth at the lowest ebb, causing huge damage to the businesses and unemployment graph also witnessed an unusual surge.

Former Finance Minister Dr Salman Shah stated that the SBP would have to make a large cut in interest rate for the revitalisation of the country’s economic growth. However, the cut in discount rate by 100 basis points would definitely yield some positive impact. He said that Pakistan has no employment generation, as industries are being closed down and non-performing loans are rising, posing a threat to industrial growth. The government should make a substantial cut in non-development expenditure and focus on revival of growth.  Renowned economist Dr Shahid Hassan Siddiqi said that the State Bank approach toward monetary policy is rather conservative and is based on its own analysis of the situation. The continued tight monetary policy in the past has paid some dividends in reviving economic and financial stability but in view of the latest internal and external development, the SBP approach from now onwards should be beneficial to both the businessmen and the general public.

The government must come up with concrete policies to reduce rampant corruption in state-owned organisations, eradicate poverty and unemployment.

IHA Director Sardar Usman Ghani urged the governor SBP to review all other economy related banking policies and facilitate the private sector that was engine of the growth.

He stated that cut in discount rate down by 100 basis points to 8.5 per cent in monetary policy will spur the economic activities. Usman Ghani said that reduction in interest rates cuts cost of production, strengthens debt repayment ability and improves the credit worthiness. This encourages businessmen to make investment in the productive activities, increasing the wealth of the nation.

Director IHA observed that such initiatives also result in job creation, leading to increased employment opportunities. Such financing helps businessmen enhance their working capital and better manage their inventory, he added.

Chairman APTMA S M Tanveer believes the decrease in borrowing costs coupled with the decline in energy price may raise the exports by 15 to 20 per cent in times to come.

According to him, reduction in the interest rate is a good omen and it is a step in the right direction enabling environment for sustainability and expansion of textile industry in Pakistan.

S M Tanveer said the government should bring down electricity rates, logistics in the falling oil price scenario. He expressed his gratitude to the Prime Minister Nawaz Sharif for taking notice of 10-hours electricity loadshedding and directing to reduce it to four hours a day.

FPCCI newly-elected president Mian Adrees said that lower interest rate triggers borrowing and investments. He added that excessive use of bank borrowing by the government led to excessive rate of inflation, reduced the supply of credit to the private sector and increased the nominal lending rates, reflecting high inflation, attractive return offered by the government and high interest rate spread.