ISLAMABAD /DNA/ – Pakistan Hosiery Manufacturers & Exporters Association (PHMA) has urged the political leadership to sign a ‘Charter of Economy’ in order to meet national economic targets.

PHMA Central Chairman Shahzad Azam Khan, in an appeal to the newly-elected Prime Minister of Pakistan Shahbaz Sharif, said that the businesses should go on towards sustainability and the wheels of industries should run smoothly and for this purpose the government and all the mainstream political parties should have to carve out a ‘charter of economy’ as part of larger economic agenda.

Raising serious concern over massive hike in the rate of Export Refinance Scheme (EFS) following the huge rise in key policy rate by the SBP, Shahzad Azam Khan was of the view that the industry was already facing various challenges in the post-COVID scenario, including liquidity crunch and other financial hardships.

“Prime Minister Shahbaz Sharif and his economic and financial team must take immediate notice of genuine demand of the business community and intervene to revert back the policy discount rate and EFS rate back to their previous position or at par to the rates of regional countries and ensure the trade and industrial activities should not suffer or stop in order to save the investment of industrialist and protect the soft and positive image of Pakistan globally.”

In the current outlook, such exorbitant increase in policy rate will bring devastating impact and will put a fatal blow on the local manufacturing industry. In absence of business enabling and conducive environment how local manufacturers shall pay such high mark-ups, he asked. He said that the prevailing situation and circumstances demand to incentivize the local industry rather than penalizing it.

He said that the value-added textile industry is shocked and disappointed over recent abrupt increase in policy rate hike to 12.25 percent with a hefty increase of 250 basis points by the State Bank of Pakistan (SBP) which should have been contained at previous position in view of sensitive economic conditions and political wrangling in the country. Such unexpected, rapid and heavy increase will bring detrimental effects on overall trade and industry as well as all segments of the economy. The industry has expressed dismay over the unexpected move of SBP to upward revise the policy rate without consulting the stakeholders while the government was also in jeopardy. If it was necessary it should have be taken by SBP in a prudent manner by increasing 50 or 100 basis points. Its repercussions will be harsh. Such a high and irrational increase decided overnight has not been witnessed in the previous history of Pakistan and it would bring disastrous effects on economy, industry and export. The industry has urged that the new government must intervene and bring policy rate back to single digit in the larger interest of the Pakistan to sustain and support the industrial activities and maintain inclining trend in exports. Similarly, the enhancement in Export Finance Schemes (both Part I & II) previously from 2.50 percent for SMEs and 3.50 percent for non-SMEs to 5.5 percent, whereas the bank-spread is additional, has also widely spread discontentment and the SME exporters are highly upset and saddened over this ‘anti-export and anti-economy’ move which will increase liquidity pressure and will also hamper their export efficiency. The new Government must take serious notice of this sudden unwelcoming and unjustified move of SBP and bring back the policy rate as well as the EFS rate to previous positions or further revise downward, if possible.