SBP Disbursed Rs. 229 Billion Among 2,858 Firms to Prevent Layoffs: IMF Report

The State Bank of Pakistan (SBP) has disbursed Rs. 229 billion among 2,858 firms 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, which has also stated that the daily new cases are averaging 600 cases compared to around 300 cases at the start of September.

The economic activity worsened notably, and growth is preliminarily estimated at –0.4 percent in the fiscal year 2020. A gradual recovery is expected in the fiscal year 2021 as the economy reopens, it added.

The report further stated that SBP has expanded the scope of existing refinancing facilities and introduced three new ones to:

  • Support hospitals and medical centers to purchase COVID-19-related equipment (40 hospitals, Rs. 7.8 billion);
  • Stimulate investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects (170 new projects, Rs. 125 billion);
  • Incentivize businesses to avoid laying off their workers during the pandemic (2,858 firms, Rs. 229 billion).

Given their success, these facilities have been extended beyond their original deadline of June 2020 to September or December 2020.

SBP introduced temporary regulatory measures to maintain banking system soundness and sustain economic activity. It has also introduced mandatory targets for banks to ensure loans to construction activities account for at least 5 percent of the private sector portfolios by December 2021.

Further regulatory measures, introduced by SBP, to facilitate the import of COVID-19-related medical equipment and medicine include:

  1. Lifting the limit on import advance payments and import on an open account.
  2. Allowing banks to approve an Electronic Import Form (EIF) for the import of equipment donated by international donor agencies and foreign governments.

SBP has also relaxed the condition of 100 percent cash margin requirement on the import of certain raw materials to support the manufacturing and industrial sectors.

Since the onset of the crisis, provincial governments have also been implementing supportive fiscal measures through June 2020, consisting of cash grants to low-income households, tax relief, and additional health spending (including a salary increase for healthcare workers).

More recently, to preempt a potential second wave, the government has set up several measures through December 2020, such as PCR test requirement [to detect coronavirus] for international passengers arriving from high-risk countries and the selective closure of educational institutions with reported cases of infections. The government has also issued warnings for a potential lockdown in case SOPs are not followed properly.

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