FAISALABAD, Feb 03 (APP):A single-digit markup rate is imperative to stimulate necessary economic growth, increase borrowing and reduce the debt burden, said Rehan Naseem Bharara, President Faisalabad Chamber of Commerce & Industry (FCCI).
In a statement here on Monday, he said that decline in the Consumer Price Index from 4.1 to 2.4 percent reflected that market had outperformed despite multiple challenges to continue its existing momentum. However, further reduction in markup rate was necessary.
He said that a single-digit markup rate would reduce the cost of borrowing for individuals, businesses and the government. “It would also lead to increased borrowing, investment and consumption, which could stimulate economic growth”, he said and added that a lower markup rate could also make credit more accessible to Small & Medium-sized Enterprises (SMEs), which were backbone of Pakistan’s economy. This could help them to expand their businesses, create jobs and increase economic activity, he added.
He said that the business community was continuously pressing to further trim the markup rate as it would reduce the debt burden. “This could also lead to a decrease in debt servicing costs and thus provide a breathing space to utilize national resources for other productive and nation building purposes”, he added.
He said that lower markup rate would make Pakistani businesses more competitive in the global market in addition to increasing exports, reducing imports and improving trade balance.
The FCCI president said that a single-digit markup rate could attract foreign investment besides encouraging domestic investment. It could also lead to increase economic activity, create jobs and improve growth rate.
The lower markup rate could also help in reducing inflation as borrowing costs would decrease and the money supply would increase. It would also lead to decrease in prices which in return could improve living standards of the masses, he added.
Bharara further said that a single-digit markup rate was essential for supporting economic growth as it could increase aggregate demand, stimulate investment and create more jobs. It would also play a vital role in reducing poverty and improving fiscal discipline, ultimately leading to a more stable and prosperous economy, he concluded.
