AGL 37.89 Decreased By ▼ -0.26 (-0.68%)
AIRLINK 124.10 Increased By ▲ 2.59 (2.13%)
BOP 5.67 Decreased By ▼ -0.18 (-3.08%)
CNERGY 3.75 No Change ▼ 0.00 (0%)
DCL 8.55 Increased By ▲ 0.15 (1.79%)
DFML 40.48 Decreased By ▼ -0.41 (-1%)
DGKC 87.10 Increased By ▲ 2.50 (2.96%)
FCCL 33.98 Increased By ▲ 1.28 (3.91%)
FFBL 66.01 Increased By ▲ 0.51 (0.78%)
FFL 10.20 Increased By ▲ 0.15 (1.49%)
HUBC 104.45 Increased By ▲ 0.65 (0.63%)
HUMNL 13.45 Increased By ▲ 0.20 (1.51%)
KEL 4.78 Increased By ▲ 0.35 (7.9%)
KOSM 6.84 Decreased By ▼ -0.25 (-3.53%)
MLCF 38.84 Increased By ▲ 1.34 (3.57%)
NBP 60.35 Increased By ▲ 0.10 (0.17%)
OGDC 179.65 Increased By ▲ 7.40 (4.3%)
PAEL 24.97 Increased By ▲ 0.17 (0.69%)
PIBTL 5.71 Increased By ▲ 0.01 (0.18%)
PPL 153.00 Increased By ▲ 11.31 (7.98%)
PRL 22.79 Increased By ▲ 0.07 (0.31%)
PTC 14.91 Increased By ▲ 0.17 (1.15%)
SEARL 66.85 Increased By ▲ 2.29 (3.55%)
TELE 7.01 Decreased By ▼ -0.13 (-1.82%)
TOMCL 35.70 Increased By ▲ 0.20 (0.56%)
TPLP 7.32 Increased By ▲ 0.03 (0.41%)
TREET 13.99 Decreased By ▼ -0.21 (-1.48%)
TRG 50.95 Decreased By ▼ -0.80 (-1.55%)
UNITY 26.40 Decreased By ▼ -0.20 (-0.75%)
WTL 1.23 Increased By ▲ 0.01 (0.82%)
BR100 9,717 Increased By 233.5 (2.46%)
BR30 29,237 Increased By 866.2 (3.05%)
KSE100 90,860 Increased By 1893.1 (2.13%)
KSE30 28,458 Increased By 630.4 (2.27%)

ISLAMABAD: The government of Pakistan's housing package to subsidise mortgages as well as the provision of tax incentives to the construction sector got extended in the context of the second wave of the Covid-19 to the end of December 2021, says the International Monetary Fund (IMF). The Fund 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 added that a second wave of infections emerged in the fall as starting in mid-November, the daily new cases have exceeded the 2,000-mark, and the positivity rate had been witnessed an upward trend before moderating in mid-December.

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, theatres and wedding halls.

Educational institutes are expected to reopen in phases from January 18th.

In early December, the government applied to the UN's COVAX Facility, which will cover priority groups-around 20 percent of the population.

It is also in discussions with several of the vaccine manufacturers and with donors (the World Bank and the Asian Development Bank) for the procurement of extra vaccines which will be funded with a $250 million budget allocation.

The launch of the vaccination drive is expected in the second quarter of calendar year 2021.

The unexecuted part of the relief package worth Rs 1.2 trillion is being carried forward to fiscal year 2021.

In addition, the fiscal year 2021 budget includes further increases in health and social spending, tariff and custom duty reductions on food items, an allocation for "Covid-19 Responsive and Other Natural Calamities Control Programme" (Rs 70 billion), a housing package to subsidise mortgages (Rs 30 billion), as well as the provision of tax incentives to the construction sector (retail and cement companies), which got extended in the context of the second wave to the end of December 2021.

The IMF further stated that the State Bank of Pakistan (SBP) has expanded the scope of existing refinancing facilities and introduced three new ones to: (i) support hospitals and medical centres to purchase Covid-19-related equipment (39 hospitals, Rs8.36 billion, to date); (ii) stimulate investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects (346 new projects, Rs278 billion, to date); (iii) incentivize 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 2021 to September or December 2021.

The SBP introduced temporary regulatory measures to maintain banking system soundness and sustain economic activity.

These include: (i) reducing the capital conservation buffer by 100 basis points to 1.5 percent; (ii) increasing the regulatory limit on extension of credit to the SMEs by 44 percent to Rs180 million; (iii) relaxing the debt burden ratio for consumer loans from 50 percent to 60 percent; (iv) allowing banks to defer clients' payment of principal on loan obligations by one year (Rs659 billion being deferred to date); (v) relaxing regulatory criteria for restructured loans for borrowers who require relief beyond the extension of principal repayment for one year; and (vi) suspending bank dividends for the first two quarters of 2020 to shore up capital.

The SBP has also 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.

Copyright Business Recorder, 2021

Comments

Comments are closed.