The Pakistan Economy Watch (PEW) on Sunday said banks should play role in development of economy while government should limit borrowings to pave way for affordable private sector credit.  Pakistan was not formed for banks rather banks were established to help develop economy. Sole aim of State Bank of Pakistan (SBP) policies should be to help boost economy, it said.

 Banks are acting in a way that is not helping economic development, said Dr. Murtaza Mughal, President PEW, adding that regulatory bodies should try to improve situation.  He said that almost all the sectors of economy are showing dismal performance due to terrorism, inflation, uncertainty and energy shortages but the profit of banks is increasing.

 Banks earned over Rs 50 billion in first nine months of this calendar year while their earning stood at 45 billion last year, he said. Dr. Murtaza Mughal said that banks would continue to ignore private sector until government continue to borrow on high interest rates. Government has borrowed Rs 813 billion in 12 months pushing domestic debt to around Rs 5 trillion.

 This situation is contributing towards displeasure of IMF, defaults, closures, unemployment, poverty and unrest; he said.

 Annual increase of one million unemployed workforce demands an immediate shift in policies of banking companies and supervisory bodies otherwise plans to reduce poverty will never be realised, he said.

 Many exporters are refusing orders due to high interest rates while the textile sector is major looser that provide one billion dollar of foreign exchange monthly to the country.  He said that people use garments and bed sheets etc while yarn, gray cloth, dying, designing etc would not involve consumers therefore these sectors should be excluded from the ambit of proposed RGST.

 Few units in country complete all stages of the textile processing that can help them avoid RGST while the rest of units will suffer.  Preparations to impose RGST on all textile outputs like ginning, making yarn, weaving, dying and garments would destroy this largest urban employment providing industry.