ISLAMABAD: The government of Pakistan is targeting to vaccinate 70 million people by the end of 2021 and has fully vaccinated approximately three million people as of July 1, 2021 and partially vaccinated around 13 million people, says the International Monetary Fund (IMF).
The IMF in its updated report, “Policy Actions Taken by Countries,” which reviewed various steps Pakistan has taken to deal with the Covid-19 crisis, stated that the pandemic seems under control with new daily cases falling below 1,000, and the positivity rate falling below 2.5 percent.
Economic activity worsened notably in fiscal year 2020, recording a negative growth of –0.5 percent; however, activity rebounded strongly in fiscal year 2021 with growth preliminary estimated at 3.9 percent.
The report further noted that most of the remaining restrictions are being lifted in July 2021 and the number of inbound flights has increased. In parallel, vaccination certification is being made mandatory for usage of indoor services and entry to events.
The vaccination campaign is being supported by the COVAX facility, as well as by the World Bank and the Asian Development Bank through the provision of both funding and technical assistance.
Given the delays in the supplies through the COVAX facility, the government is allocating funds to procure vaccines from China and has started rolling out “PakVac”, a locally produced vaccine, developed by China's single shot vaccine producer “CanSino”.
The government has also allowed private laboratories to import and deliver vaccines (namely Sputnik V vaccine since April 2021).
The fiscal year 2021 provincial budgets also provided tax relaxations and sizeable increases in expenditure allocations, especially on health services.
The State Bank of Pakistan (SBP) expanded the scope of existing refinancing facilities and introduced three new ones in 2020 to (i) support hospitals and medical centers to purchase COVID-19-related equipment (47 hospitals, Rs15.6 billion, to date); (ii) stimulate investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects (628 new projects, Rs436 billion, to date, ended by March 2021); (iii) incentivize businesses to avoid laying off their workers during the pandemic (2,958 firms, Rs238 billion, to date).
These facilities had been extended beyond their original deadline of June 2020 to September or December 2020.
The schemes have now largely expired.
Moreover, 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 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 (Rs657 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