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SBP raises discount rate up to 9.5pc

SBP raises discount rate up to 9.5pc

LAHORE: State Bank of Pakistan has increased the discount rate by 50 basis points for two months.

Addressing a press conference on Friday afternoon, Governor State Bank of Pakistan Yaseen Anwar said the discount rate is being raised to 9.5 percent, from earlier rate of 9 percent.

Increase of 50 basis points in the discount rate would lead to a matching increase in the mark-up rate on banks’ lending to the public and private sector.

Governor SBP said the central bank had increased mark-up rate with the aim to pre-empt increase in inflation.

Increase in the discount rate appears unexpected as the stock market investors and analysts were speculating that the State Bank would keep the mark-up rate unchanged in the new monetary policy.

He pointed out that in last two months the government had borrowed 633 billion rupees for the budgetary support.

SBP Governor said the private sector credit off take is slow because of energy crisis and critical law and order situation in the country.

He said the new government was pursuing economic reforms agenda to improve the growth and economy of the country. In last financial year, he said, the budgetary deficit stayed much above the target and expectations.

SBP Governor said the political and democratic stability in the country could improve economy and foreign investment. He also said the value of rupee fell and the US dollar that gained 6 rupees value in last two and half months.

He said that in 2013-14 the budgetary deficit is expected to remain around 6.3 percent of the GDP as against 8 percent in 2012-13. He supported reforms in the energy sector to overcome crisis and support industrial and economic growth.

He pointed out that in last financial year, the large scale industrial sector showed growth over the preceding financial year.