Revitalizing economy during COVID-19 epidemic
As the toll of COVID-19 cases in Pakistan crosses 185,000, the impacts of the epidemic are beginning to gain strength. Pakistan experiences an economic challenge with continuing lockdowns causing problems for people and firms alike. The sluggish financial growth is causing major concerns among various stakeholders of society.
Fortunately, there are signs for hope on the international front, which suggest that the recovery phase can initiate within a few months. While China has eased major lockdown restrictions within the country, several US states are also gradually opening up with strict health and safety regulations. Countries such as Spain and Italy are also reducing certain limitations to permit people in initiating restraint business operations.
In Pakistan, the weak health and medical systems have led to an extension in the lockdown. The partial resumption of firms, however, has offered some semblance to elements functioning as fundamental support mechanisms for the economy.
Pakistan’s economy heavily relies on agriculture and SMEs (Small and Medium Enterprises). The govt and the State Bank of Pakistan (SBP) have launched support packages like the Temporary Economic Relief Facility (TERF), a PKR 1.2 trillion stimulus plan, and other facilities such as Payroll financing option for major firms. The rate of interest has also been dropped thrice to the present rate of 9%.
Banks are providing many subsidized loans such as hospital financing loans etc, to facilitate health care institutions in their attempts to battle a massive influx of patients throughout the country. Simultaneously, financial institutions are taking a diverse range of initiatives to facilitate the economy during these challenging times.
Financial institutions in the country have shouldered a further responsibility in the current situation where they’re functioning as safety buffers and lending organs that organizations can trust. They’re also providing cover to investors by extending loans of more than PKR 100 billion against listed shares after the SBP decreased the marginal call requirement to 10%. At an equivalent time, the reduction of the Capital Conservation Buffer has freed up a greater loan pool for these institutions.
Currently, the future is not certain with various financial analysts and economic experts making predictions due to the volatility of things. Despite the fact that banks within the country are expected to require significant profit cuts, the packages being introduced by this sector still drive the economy forward.
The International Monetary Fund has estimated that the country’s GDP may contract by the maximum amount of 2.5%, which may translate into an initial economic loss of PKR 1.3 trillion but various experts believe that businesses and individuals can ameliorate the general damages to the country by sharing the burden with each other. This is a difficult time for businesses across the globe and it seems to be the sole viable solution available to mitigate the future risks of the threat.
