Economic managers seek single-digit discount rate

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ISLAMABAD: The economic managers of the PPP-led coalition government are striving to compel the State Bank of Pakistan (SBP) to bring down the discount rate to a single digit on the basis of manipulated low inflationary figures, as the Pakistan Bureau of Statistics (PBS) Monday came up with the figure of 6.93 percent for November 2012.
Independent economic pundits term this figure far from reality. The International Monetary Fund (IMF) has been calling for tight monetary policy, while the government wants to ease it further and take political mileage out of it and make the industrialists and big brokers of the stock exchanges happy, sources said.

“The figure of inflation is manipulated because of sharp reduction in gas prices beginning from July 2012,” said Dr. Ashfaq Hassan Khan, principal and dean, NUST Business School and former advisor to the finance ministry.

“Reduction in gas prices is an illusionary number and it has no real effect, so inflation calculated on the basis of illusionary reduction of gas prices is a meaningless number and if not corrected by the PBS, inflation in Pakistan could come down to 2.5 to 3 percent by June 2013,” he said.

In November 2012 inflation was recorded at 6.9 percent against 7.7 percent in the previous month and 10.2 percent in the corresponding month last year. Average five-month inflation during July-November FY13 touched 8.4 percent against 11.1 percent recorded in the corresponding period of last year, the PBS monthly CPI inflation monitor says.

 

Courtesy: The News


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