ISLAMABAD: The coronavirus cases positivity rate in Pakistan has been on an upward trend in the past two weeks, raising serious concerns over a second wave of infections, 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 have exceeded the 1,000-mark compared to around 300 cases in the start of September, and the positivity rate has been on an upward trend in the past two weeks, raising serious concerns over a second wave of infections. The report stated that to preempt and mitigate a possible second wave, the government has set up several measures through December 2020, such as PCR test requirement for international passengers arriving from high-risk countries and the selective closure of educational institutes with reported cases of infections.
The authorities have also made it compulsory for all citizens to wear a face mask outside of their homes and issued warnings for a potential lockdown in case Standard Operating Procedures (SOPs) are not followed properly.
According to the update, the State Bank of Pakistan (SBP) has expanded the scope of existing refinancing facilities and introduced three new ones to: (i) support hospitals and medical centers to purchase COVID-19-related equipment (40 hospitals, Rs7.8 billion, to date); (ii) stimulate investment in new manufacturing plants and machinery, as well as modernization and expansion of existing projects (170 new projects, Rs125 billion, to date); (iii) incentivise businesses to avoid laying off their workers during the pandemic (2,858 firms , Rs229 billion, to date).
Given their success, these facilities have been extended beyond their original deadline of June 2020 to September or December 2020.
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 (with a total of Rs654 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.
The SBP has introduced further regulatory measures to facilitate the import of COVID-19-related medical equipment and medicine.
These include (i) lifting the limit on import advance payments and import on open account; and (ii) allowing banks to approve an Electronic Import Form (EIF) for the import of equipment donated by international donor agencies and foreign governments.
The SBP has also relaxed the condition of 100 percent cash margin requirement on import of certain raw materials to support the manufacturing and industrial sectors, it added.
Copyright Business Recorder, 2020