Rising Interest Rates Jolting Businesses Badly
FPCCI said the interest rates were unjustifiably jacked up to 13.5% whereas, the inflation rate was around 8-9% at the beginning of the IMF program
Federation of Pakistan Chambers of Commerce & Industry (FPCCI) wrote a letter to get the attention of Finance Minister Shaukat Tarin to control rising interest rates that are shaking businesses.
In the letter, FPCCI highlighted that the interest rates were unjustifiably jacked up to 13.5% whereas, the inflation rate was around 8-9% at the beginning of the IMF program.
It derailed the economy and the country experienced negative growth for the first time after 1952.
Moreover, the apex business body asked Tarin to refrain from enhancing the tax burden on people and launch a high-level inquiry to find out who raised the interest rate to 13.25% about two years ago.
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The FPCCI said the then finance minister unjustifiably took decisions to commit the federal government to higher interest for the next few years by re-profiling short-term loans to the longer term at very high rates.
These higher interest rates diverted 1,100 billion rupees of taxpayers to banks annually.
Due to higher rates profits of banks recorded a growth of 100 percent and such sets of debt management need to be reversed.
“It is disturbing for us to learn through press reports that the International Monetary Fund (IMF) has demanded imposition of taxes of Rs 500 billion during the current financial year”, says the letter.
The industry of Pakistan is of the view that mismanagement of federal debt needs to be addressed rather than increasing the tax burden and restricting the economic growth.
Lastly, FPCCI said that a high-level inquiry should be conducted into the deliberate acts of debt mismanagement, which has cost the country’s taxpayers Rs 2.5 trillion and it is still draining fiscal resources.
