American Business Forum (ABF) President Salim Ghauri has expressed deep concerns over the latest report by State Bank of Pakistan (SBP) regarding the practice of banks massively investing in government papers, including 82% of entire treasury bills and 89% of Islamic Sukuk bonds.
He said the banking sector in Pakistan is reluctant in extending loans to the private sector, adding that further pressure on the economy in a situation when both inflationary pressure coupled with fiscal and trade deficits was dampening economic growth of the country.
He said the IMF has indicated in its latest report that the fiscal deficit is likely to be 7% of GDP during the current fiscal year. Inflation would be climbing up further with printing of more money by the government to meet the fiscal gap, he added.
The banks, on the other hand, are investing hugely into the purchase of treasury bills without any check and bounds, he deplored.
According to him, the private sector was succumbing to energy crisis altogether with idle capacities and massive lay offs, a common industrial feature of the day. Further, he deplored that the banks were charging high mark up on short and long term loans as well as working capital, impacting negatively to business growth in Pakistan.
Ghauri has urged the SBP to devise a mechanism propelling the banks to adopt a business-friendly approach and facilitate the private sector in business expansions. Also, he said, the bank mark up should be made globally competitive to attract new investment in different segments of economy.
