APTMA appreciates SBP's policy in dealing with economic impact of COVID-19

APTMA appreciates SBP's policy in dealing with economic impact of COVID-19.

LAHORE (Dunya News) – APTMA issued a press release and said it is highly appreciative of the State Bank of Pakistan’s policy in dealing with the economic impact of COVID-19. The SBP has in very quick time;

1. Announced two concessionary finance schemes

a. Temporary Economic Relief Facility (Modified to included expansion or acquisition) b. Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.

2. Allowed rescheduling of principal by deferring installments by one year.

3. Reduced interest rate from 13.25% to 9%.

Some of the things that SBP can further do to strengthen support of the economy and industry are:

1. Monetary Policy Board of SBP scheduled for 15th May 2020 should reduce the interest rate by 200 bps to 7% in line with inflation and interest rates in competing countries.

2. Concessional refinance currently is only available to industry beyond weaving thereby excluding cotton, spinning and weaving which require heavier investment in inventory. In order to sustain industry, entire value chain should be eligible for concessional finance. Interest may be deferred on both short term and long-term financing. The Industrial sector could not benefit from reduction in interest rates as it was announced in first week of April whereas the quarterly interest rates got locked in at 12.5% ++

3. Furthermore, in line with the principal deferment, Interest for quarters up to 31st March and 30th June 2020 should be deferred for a period of 12 months as the sector has suffered serious cash flow & profitability issues due to Covid-19.

a. Export orders cancelled b. Payments due against LCs delayed c. Fresh orders not forthcoming d. Domestic demand also crashed due to lockdown.

We strongly urge the State Bank of Pakistan to implement these further measures to enable industry to sustain employment and maintain exports.