By: Sannaullah Hakro
SBP Governor Dr. Raza Baqir yesterday announced the monetary policy for the next two months, according to which the interest rate will be maintained at seven percent. In the current capitalist economy, the interest rate is a basic measure to control economic activity. Has status The reduction in interest rates has boosted the economic activity of the local private sector as the business community has to pay lower interest rates on loans taken to set up new industries or promote businesses. The current head of the SBP had adopted a policy of keeping interest rates high after taking office. A year ago, the interest rate had reached a record high of 13.25 per cent. Attracts to buy bonds because they can make huge profits in the short term. But the real stabilization of the national economy is possible only if new industries and factories are set up locally in the country to increase national production and exports, reduce dependence on imported goods and create new jobs. The results of prosperity can reach the common people. However, the reduction in interest rates also encouraged the construction and textile industries
As a result of government initiatives, these sectors have begun to show some improvement, but overall economic activity has not increased significantly. Apart from the Corona epidemic, one of the main reasons for this situation is the constant rise in electricity, gas and petrol prices, which has severely affected the competitiveness of our industrial and agricultural products in the global market. However, we are not able to stop the increase in their rates. On the recent hike in electricity rates, the SBP governor said it would push up commodity prices, but at the same time expressed confidence that inflation would come down further. But how will that happen? This is not explained in his statement. Regarding future monetary policy, he clarified that interest rates will not rise sharply, will remain at 7% till the economy improves, while the IMF has been satisfied with future interest rate hikes. ۔ Instead of announcing an early reduction in inflation, the Governor SBP has forecast a rate of seven to nine per cent, which means that the people will face further rise in prices of all commodities, including basic necessities of life. Have to be ready for Pointing out the promising aspects of the national economy, Dr. Raza Baqir said that our currency remained stable in the global arena compared to other countries, employment has started to recover due to positive growth in 12 sectors of manufacturing, increase in construction activity cement. Prices remained stable, sales of petroleum products hit a two-year high, while sales of cars and tractors also rose, while the economic recovery since July has been more stable in recent months. While this picture of the national economy is encouraging, there is no shortage of steps that can be taken to improve it further. For example, the goal of reducing electricity tariffs can be achieved by installing smart meters, 100% collection of bills and promoting solar energy as a government policy. Arranging broader consultations to make economic strategy better and more effective can certainly be a source of useful results.