SBP's steps to deal with Covid-19 crisis: Banks deferred Rs659 billion of payment of principal on loans: IMF

ISLAMABAD: Under the State Bank of Pakistan's temporary regulatory measures, banks have deferred Rs659 billion of clients' payment of principal on loan obligations for one year so far, to maintain the banking system's soundness and sustain economic activity, says the International Monetary Fund (IMF).

The IMF in its report, "Policy Actions Taken by Countries" updated reviewed various steps Pakistan has taken since March to deal with the Covid-19 crisis. The government is in discussions with several of the vaccine manufacturers and has signed up for the UN's COVAX Facility, it added.

Starting in mid-November, the daily new cases have exceeded the 2,000-mark, and the positivity rate has been on an upward trend, especially in the most densely-populated areas, pointing to a second wave of infections.

As a result of the Covid-19 shock, the economic activity worsened notably, with growth preliminarily estimated at -0.4 percent in fiscal year 2020. A gradual recovery is expected in fiscal year 2021.

To mitigate the second wave, smart lockdown measures have been re-imposed, along with a general ban on public meetings and rallies, and the closure of educational institutes and venues such as cinemas, theaters, and wedding halls.

It has also approved a budget allocation of US $150 million for the launching of the vaccination drive in the second quarter of 2021.

The SBP has expanded the scope of existing refinancing facilities and introduced three new ones to: (i) support hospitals and medical centers to purchase Covid-19-related equipment (41 hospitals, Rs7.99 billion, to date); (ii) stimulate investment in new manufacturing plants and machinery, as well as modernisation and expansion of existing projects (269 new projects, Rs211 billion, to date); (iii) incentivise businesses to avoid laying off their workers during the pandemic (2,958 firms , Rs238 billion, to date).

These facilities have been extended beyond their original deadline of June 2020 to September or December 2020. The SBP introduced temporary regulatory measures to maintain banking system soundness and sustain economic activity.

Copyright Business Recorder, 2020