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The State Bank of Pakistan (SBP) has warned that the country could face food and social security challenges in wake of extension in lockdowns, which are imposed to curb the rise of COVID-19 cases.

Citing the United Nations report, the SBP said that roughly 40 percent of the population in Pakistan faces multidimensional poverty. “This raises challenges of food and social security in an extended lockdown scenario,” said the SBO in a video message.

The central bank pointed out that Pakistan’s debt levels remain elevated, which constraints the government's ability to spend on relevant sectors. “We have limited monthly and quarterly information regarding key sectors such as GDP, livestock, and SMEs, this impacts the ability to give an accurate picture of certain parts of the economy in real-time.”

The SBP informed that the consumption rate in Pakistan is the highest among the regional economies, which means that the country’s GDP growth is vulnerable in a limited mobility scenario.

“Lastly, informality in our job market is very high (i.e. 72 percent), which increases the risk of layoffs and decreases in earnings,” it said.

SBP further said the government expenditure on health and education is relatively low compared to regional countries. “Having a strong healthcare system and adequate level of awareness among the public is important in the current scenario,” it said.