Unisame criticises increase in interest rate

KARACHI: The Union of Small and Medium Enterprises (Unisame) has criticised the State Bank of Pakistan (SBP) for increasing the discount rate by 300 basis points, or 3 per cent, which reached 20 per cent, a statement said on Thursday.

At this rate, the Small and Medium Enterprise (SME) sector will be punctured and unable to borrow from the commercial banks and other financial institutions, it added.

Unisame President Zulfikar Thaver said that the commercial, microfinance banks and other financial institutions are already lending money at higher rates, adding their spread above the discount rate and the micro to medium sector entrepreneurs will be unable to borrow money.

According to Thaver, “At this rate and in this manner, we have noticed the discount rate is chasing the inflation rate and both are increasing, while denying the meaning of an increase in the discount rate to reduce the inflation. Therefore a stop has to be put to monetary tightening and other methods must be used to curb inflation.

The inflation is caused by hoarding, profiteering, black marketing, smuggling and panic-like situation because of the continuous rise in the dollar value, he added.

The Unisame Council members called upon the policymakers to adopt sharper techniques and learn the techniques to curb inflation from the international experts.

The MSME sector expressed disappointment and urged the government to adopt corrective measures to control inflation, otherwise the SME units would be on the verge of collapse.

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