September 17, 2013
All Pakistan Textile Mills Association (APTMA) has criticised central bank’s move to increase 50 basis points in discount rate terming it a blow to the industry. In a statement, APTMA Zonal Chairman Yasin Siddik said the textile sector had invested over dollars 400 million in new technology during the last six months as the central bank gradually eased its monetary policy. He however said the SBP had taken a u-turn to again revise the 50 bps upward in the Monetary Policy that would hinder the investment in industrial sector once again resulting in expanding defaulters’ list.
APTMA chief said that high interest rate was the major hurdle in accelerating industrial growth. After the State Bank of Pakistan (SBP) lowered its policy rate from 13.5 percent to 9.5 percent during the last one year, textile exports increased by eight percent, he added.
APTMA Chairman said the reduction in mark-up rate had a positive impact on the nonperforming loans as well. The nonperforming loans of the textile sector were rapidly rising since 2008 but ever since the central bank started increasing the interest rates the growth had stopped, he said.
While terming high interest rates as a major cause in inflating non-performing loans (NPLs), he said the abnormal surge of more than 24 percent from Rs 494 billion to Rs 653 billion in FY2012 in just one year was alarming. He said reasons for such an abnormal increase in NPLs were higher interest rates being the basic cause and the shortage of gas to the industry being the second reason.
He said SBP Governor had given the reason for raise in discount rate on the basis of some speculations which was not justified as the survival of local industry comes first. He said the business community believed that decision as one of the consequence of the agreement with the IMF. He demanded of the SBP to reverse this decision in the greater interest of country’s economy. Courtesy Business Recorder
Published in ZaraiMedia.com