State Bank of Pakistan’s Healthcare Plans

By Durdana Najam

By the end of March this year, the entire world was under coronavirus lockdown. It didn’t take the negative effects of the lockdown long to fall on everyone irrespective of the economic or social condition. Countries with the welfare of their people as the central policy of their lockdown decision issued economic packages to prevent the destitute from further falling into the abyss of darkness.

Unemployment was the biggest fear to strike at the heart of the policymakers. They knew that the capitalist-driven economic culture would not mind throwing people out in droves in the face of shrinking profit margins—an imminent possibility.

In due course, the COVID-19-induced lockdown left even countries with strong economies in the wilderness, not to speak of developing or under-developed countries, where the provision of healthcare has never been part of developmental policy structure.

According to the United Nations’ latest estimate, the coronavirus pandemic is costing the global economy $375 billion a month. Some 500 million jobs have been lost so far. Human development is on a reverse gear for the first time since1990.

Pakistan, like other countries, also announced economic packages to sustain the poor and the businesses alike to minimize the effect of the lockdown.  It would not be an exaggeration to say that had it not been for the Pakistan government’s compassionate and people-centric policies, the country might not have survived the virus’s relentless attack, which has floundered the world economy.

First, it was the Ehsas program under which thousands of households were given Rs 12,000 in cash.  Then the State Bank of Pakistan (SBP) started multiple schemes to give loans at a zero percent interest rate to banks for businesses so that they would pay salaries to their employees.  Under another scheme, the central bank started a novel but effective program of Refinance Facility under which banks would lend loans to hospitals for capacity building.

In a country where the health sector has been neglected over the decades, anything amounting to this level of attention caught the interest of hospitals, especially of those running being run on charities, like the Saleem Memorial Trust Hospital.  Its CEO Shahzad Saleem is all praise for the SBP’s initiative of originating the Refinance Facility to Combat Covid-19 and then executing it successfully.

Under this scheme, the SBP refinanced banks to provide financing at a maximum rate of 3 percent for 5 years for the purchase of equipment to detect, contain, and treat the coronavirus. The SBP provided this facility to banks at 0 percent. Though banks had the leverage to charge 3 percent interest, some banks kept to the zero percent rule —kudos to them.

Each hospital and medical center registered with federal or provincial health agencies and those engaged in the control and eradication of COVID-19 were eligible to initially get a loan up to Rs 200 million. Later, it was increased to Rs 500 million.

The scheme has become so popular and its results are so astounding that the central bank shall, in near future, ratchet up the refinancing figure to Rs 1 billion. The SBP’s effort will indeed go a long way in addressing health inequality and the issue of resource inefficiency in healthcare facilities.

To further support the public and private sector’s effort in their fight against the pandemic the SBP amended the foreign exchange regulations to facilitate the import of medical equipment, medicines, and ancillary items.

Subsequently, looking at the increasing workload the government further facilitated the health sector by allowing financing against existing equipment and the purchase of refurbished equipment for creating a special facility/isolation ward to deal with COVID-19. On July 06, 2020, SBP also allowed Refinance Facility for the manufacturers of protective gear and equipment, including items such as masks, dresses, testing kits, hospital beds, and ventilators.

Taking advantage of this opportunity to reorient the health sector, the SBP has allowed the extension of the loan to any hospital that would fulfill the minimum specified standards drawn out to become eligible for financing.

State Bank efforts towards the health sector’s advancement and development are indeed appreciable, especially in the view that it has taken this leap without considering the commercial risk involved.

Advanced countries progress for three overriding reasons: One, they do not reinvent the wheel. Two, their organizations and government engage academia in policymaking.  Three, they adopt a cross-sectoral approach to development.

As for the first reason, the healthcare regulating bodies should engage with each other — within and across the country — to learn from shared experiences.  This collaboration and consensus-based decision-making model has the potential to eliminate overlapped processes and find common solutions to routine challenges.

Similarly, a nexus among policymakers and academia is a sin qua non for the breakthrough in medical researches and to cultivate a strong medical fraternity for a professionally and ethically run healthcare system.

Unfortunately, medical education in Pakistan has been compromised with the result that few of our doctors were evicted from the Middle East on the charges of faking professional degrees. Many private medical universities have a charge sheet against them for being inefficient, ruthlessly expensive, and anachronistic.

The combination of academia and policymakers can have Pakistan make revolutionary changes to its health sector without much effort. The regulatory bodies, now operational in almost every province, have done a good amount of foundational work in terms of data collection, which could be used to make informed decisions to remove barriers to quality care.

Fortunately, with the assistance of the State Bank of Pakistan, we have started a journey towards finding solutions to all these imperatives. In due course, the country would be in a position to build a comprehensive and coherent framework to make the country safe against the threat of not only infectious but all kinds of diseases.

Durdana Najam is an op-ed writer based in Lahore. She writes on policy issues and can be reached at [email protected]  

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