In latest news, the State Bank of Pakistan (SBP) has enhanced the limits for housing finance and general-purpose microenterprise loans. This is a good development, as have been SBP’s earlier measures taken to counter Covid-19. But to what degree are these measures really effective.
Soon after the central bank announced its various relief measures, it started reporting statistics that reflect the progress made on those relief measures.
Consider the Rozgar Scheme which is a refinancing scheme for wages to prevent layoffs. If 1130 firms had applied by the end of April, then a total of 2784 businesses had applied for that scheme by July 24. That is more than double growth in less than sixty days. And if approved financing under those applications were 18 percent at April end, then by July 24 that number rose to 79 percent.
Similar growth numbers are seen in the central bank's statistics page that reports progress on various other schemes launched as a relief measure against Corona.
But to be able to answer the question posed above is a tricky affair. To begin with, and it’s not entirely the central bank's fault, there only a handful of SMEs that are a part of formal banking system, of which even fewer borrow formally from banks.
Here we are, in what is described as a crisis of the century leading to all sorts of troubles for businesses big, small, medium and micro –and yet no more than 1.3 million businesses have applied for various sorts of finance scheme (assuming that each application is by a unique bank customer who hasn’t made any other applications under other Covid-19 schemes). In a country of SMEs, or at least so we are told, 1.3 million is peanuts.
But to what degree SMEs have benefited from these schemes as against big players, and what has been the sector wise and province wise borrowing under these schemes? This information isn’t yet publicly available. Nor is the information relating to province wise deposit and advances available till June 2020, or province wise agri-lending (for each month till Jun 2020) for that matter.
The central bank usually updates banking numbers with a lag of a fortnight to six months depending on which database it is. Some numbers it only shares on quarterly or six-monthly basis. This is fairly satisfactory in normal times, which the present is clearly not.
The situation at hand demands that the central bank fast tracks its data collection and reporting mechanism to allow stakeholders to take better decisions on a timely basis, where the importance of disaggregated data both in terms of region/sector and in terms of smaller units of time series cannot be ignored.
On that note, the lawmakers should consider changing the SBP law such that it is made able and bound to report on State of Pakistan Economy on shorter time frames in cases of emergencies and crisis like Covid-19. Otherwise, all anyone would get is a nice post-mortem report, whereas what one really wants is to assess the impact of various policy decisions to be able to tweak them if need be.