KARACHI: The central bank needs to extend the concessionary loans scheme announced for employers to prevent layoffs by this yearend as they are yet to come out of devastating impact of lockdown, businessmen said on Tuesday.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) demanded of the State Bank of Pakistan (SBP) to consider extension in refinance scheme to support employees and prevent layoffs of workers due to lockdown after coronavirus outbreak by December 31.
In April, the SBP introduced a temporary refinance scheme for businesses to support the employment of workers in the face of economic challenges posed by the spread of the novel coronavirus (COVID-19). Its core objective is to incentivise businesses to not lay off their workers during COVID-19.
The scheme is available to all businesses through banks and covers all types of employees, including permanent, contractual, daily wages as well as outsourced workers.
The scheme supports provision of credit at concessional rate to businesses that commit not to lay off workers till September. Earlier the cutoff date was 30 June. The loss coverage for SME sector was also increased to 60 percent from the existing 40 percent to promote take-up at the smaller level of business.
Anjum Nisar, president of FPCCI said the refinance scheme helped many industrial and service oriented sectors to retain employees during corona pandemic.
“Since the companies that availed this credit facility through banks have not recovered from devastating economic impact, it would be advisable if ministry of finance supports the SBP to extend the scheme till end of the year,” Nisar said in a statement.
“In many of the countries, the second wave of corona virus has already started, Pakistan not being the case of exception, should be prepared to take proactive precautionary measures.
Discontinuation of this facility on September 30 will not serve the purposes.”
FPCCI president said ministry of finance and SBP need to review the prevailing economic situation closely before discontinuing the credit facility on concessional markup rates.
“Small and medium sized businesses have not been able to regain pre-corona economic stability,” he said. “Further, processing of documentation and furnishing of employees’ data to avail credit facility is also a time consuming activity. Therefore, withdrawal of this facility at this stage would neither be in the interest of private sector nor in the interest of the government that wants to control unemployment situation in the country.”
Since the lockdown imposed by the government in March, the SBP took a number of measures to mitigate the impact of lockdown on the economy, including an extension in repayment of loan principal amounts by one year, concessional financing for businesses to procure equipment. It’s earmarked at least Rs100 billion for emergency measures.