Reducing dependence on foreign loans

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Pakistan has been depending on foreign loans to run its economy therefore the government must work on some policies to improve domestic productivity and attract new investment by providing low cost financing to businesses.  In this connection, the government must focus on introducing low cost credit schemes for the domestic industry in order to improve its productivity, attract new investment and promote exports. Presently, the interest rates are so high that no businessman or investor is ready undertake new business ventures and the best way to cope with this problem is to come up with low cost financing schemes for business and industry. Many business groups are working on projects to expand their existing production capacities, set up new industrial units and upgrade technology, but they have put such projects on hold due to exorbitant hike in the cost of capital investment amid massive currency devaluation and sharp rise in SBP’s interest rates.

To reverse this trend, government in collaboration with SBP must work out some new schemes to offer long-term finance at 5-6 percent interest rate for the purchase of industrial machinery and equipment.  The government must facilitate certain priority sectors including engineering, food processing, information technology and others where Pakistan has strong potential to increase exports. Low interest rates were the key requirement to trigger fresh investment in industrial projects and boost exports.

The government must also focus on creating new industrial zones in Islamabad and in other major cities to facilitate the development of new industrial estates. Many potential investors have the capital to set up industrial units, but they were unable to find land at suitable price.

The  government must establish new industrial zones in every city with a population of one million people that will help create jobs for the local population and slow down pressure on larger cities and towns. The government`s economic stabilization policies and sharp reduction in the purchasing power of people have put many industries in difficult situation and urged that government should devise a scheme to help industrialists reschedule their bank loans.

 

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