ISLAMABAD: The State Bank of Pakistan (SBP) has disbursed Rs123 billion among 1,900 small and medium enterprises (SMEs) so far to incentivize businesses and avoid laying off their workers during the pandemic, says the International Monetary Fund (IMF).
The IMF in its updated report, "Policy Actions Taken by Countries" reviewed various steps Pakistan has taken since March to deal with the Covid-19 crisis.
It further stated that under the SBP's temporary regulatory measures, banks have deferred a total of Rs605 billion of clients' payment of principal on loan obligations for one year so far to maintain banking system soundness and sustain economic activity.
The SBP has expanded the scope of existing refinancing facilities and introduced three new ones that aim at: (i) supporting hospitals and medical centers to purchase equipment to detect, contain, and treat COVID-19 (28 hospitals, Rs6.1 billion, to date) (ii) stimulating investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects (27 new projects, Rs11 billion, to date); and (iii) incentivizing businesses to avoid laying off their workers during the pandemic (1,900 firms , Rs123 billion, to date).
The SBP has introduced mandatory targets for banks to ensure loans to construction activities account for at least five percent of the private sector portfolios by December 2021, the IMF added.
The report stated that educational institutes were expected to restart on September 15.
"Selective" lockdown arrangements remain in place, through the closure of shops on weekends and the sealing of specific areas of high risk, it added.
Since mid-April, the federal government, in coordination with the provinces, has been gradually easing lockdown arrangements, by allowing "low-risk industries" to restart operation and "small retail shops" to reopen with newly-developed standard operating procedures (SOPs).
In addition, restrictions on domestic and international movements have been lifted (e.g. domestic flights, train services, and international flights have resumed).
The near-term economic outlook has worsened notably, and the growth is estimated at -0.4 percent in fiscal year 2020.
A gradual recovery is expected in fiscal year 2021 as the economy reopens, it added.
Copyright Business Recorder, 2020
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