Interest rate to go down if inflation remains on decline

ISLAMABAD (Online) - State Bank of Pakistan Governor Salim Raza has said if tendency of reduction in inflation persists, the interest rate will be curtailed in July.
He said this while giving briefing to the Senate Standing Committee on Finance and later talking to media here on Wednesday.
The committee met here under its Chairman Senator Ahmad Ali. Federal Secretary Interior Kamal Shah told the committee that names of 3 key directors of any company can be put on Exit Control List if a sum of Rs 10 million stand recoverable on account of income tax and Rs 100 million on account of outstanding loans against them.
Expressing their reservations over it, Senator Haroon Akhtar, Senator Talha Mehmood and Senator Ishaq Dar said billion of rupees stand payable against every company at present. Under this law banks had been vested with sweeping discretionary powers, they noted.
Governor State Bank said central bank would never allow private banks to blackmail traders and industrialists. He indicated loans obtained by the government during the outgoing financial year, 2008-9 swelled by 7.5 trillion rupees. The government had secured Rs 220 billion for procurement of wheat and Rs110 billion for providing subsidies, he added. State loans would drop by 50pc in the upcoming financial year, he informed.
Increase in development budget and bumper crop of wheat had led to improvement by 6pc in the movement of money. The trend of reduction in inflation is continued due to this factor, he remarked. Inflation and interest rate are at par with each other in the perspective of page which stands at 14pc. State Bank would announce to decrease interest rate in the month of July if the prevailing rate of reduction in inflation continues, he declared.
Several senators complained that private banks particularly foreign banks refused to extend loans to politicians. Therefore, we are being meted out discriminatory treatment. Personal surety is demanded from us, they added.
Governor state bank told directives had been issued to all banks in August 2008 that no discrimination be shown to any one. Foreign banks would have to follow our laws, he remarked.
He indicated state bank would issue blue print within 3 months about the establishment of infrastructure financing and project financing institutions. These institutions would come into being within one year. Long-term loans would be provided to industrialists and industries through these institutions, he told.
Senator Ilyas Bilore said business had witnessed a complete breakdown in NWFP being a war stricken province. If banks could not write off loans of Rs 32 billion owed to NWFP then they should at least waive interest for two years, he demanded.