The government’s intention to raise power tariff by four percent would be a serious blow to the efforts of State Bank of Pakistan (SBP) to contain inflation and balance economy. The Pakistan Economy Watch (PEW) on Sunday while lauding the decision of SBP to cut policy rate by 1.5 percentage points to prop up growth said that the decision is surprising but pleasing as it will trigger expansion plans and buoy up stock market. Government should not use development to seek cheap credit which has already harmed the growth of the production sector, said Dr Murtaza Mughal, President of the Pakistan Economy Watch, in a press release. Decision of the SBP will please industrial sector and help reduce ratio of defaults, he said adding that it would help the country’s economy which was the slowest in the region.
He said authorities should take measures to spur growth as interest rates alone could not help overcome all issues the country was facing. Rates slash had nothing to do with energy scarcity, security situation, foreign affairs, natural disasters and political uncertainty, he added. Some thing should be done to effectively deal with weakening rupee which was adding fuel to fire of inflation and made imports costly, falling foreign investment, bad relations with America, the biggest donor, and mistrust of other international lenders. “Pakistan is faced with one of the lowest expansions in the past decade due to inefficiency of politicians, floods and militancy,” he said adding that resentment of masses had hit its peak.