This is apropos a Business Recorder op-ed "SBP throws two lifelines to industry" carried by the newspaper the other day. The writer, Tahir Jahangir, has praised the role of State Bank of Pakistan (SBP) by pointing out that it "has thrown two lifelines to industry in these dire times."
Yes it is true that most businesses were planning to shut down temporarily. It is also true that businesses were mulling reducing the number of employees massively. Fortunately, however, neither option was employed by businesses. The SBP and the banks it regulates, in my view, deserve a lot of praise for offering soft loans to tide over the wage payments for April, May, June, July, August and September. Since the money was disbursed directly to the workers, or through the companies, up to the full amount of the six months wage bill, there had been hardly any complaint about disbursement of wages. As pointed out by the writer, the rate of interest charged by the banks is a maximum of three percent per annum for borrowers on the active taxpayers list. But the businesses are still struggling to restore the pre-Corona-19 output in terms of productivity and sales. A large number of them, in my view, will find it extremely difficult to continue without resorting to layoffs or job cuts. It is however not known whether or not SBP is contemplating extending its soft loans scheme for businesses for another three months to spur economic growth and forestall layoffs.
HAROON KHAN (LAHORE)
Copyright Business Recorder, 2020