KARACHI: The State Bank of Pakistan (SBP) has introduced the subsidised Temporary Economic Relief Facility (TERF) aimed at balancing, modernisation and replacement (BMR) and expansion of existing projects, according to a statement issued by the central bank.
The measure has been taken to provide further stimulus to the economy following Covid-19's devastating impact and to support investment in the country for modernising or expanding manufacturing and production units.
The statement added that the facility was introduced in response to the feedback received from stakeholders.
"Since the outbreak of Covid-19, the SBP has taken several measures to safeguard economic activity in the country," the central bank said.
It recalled that on March 17, 2020 the central bank introduced TERF and its Shariah-compliant version to stimulate new investment in the manufacturing sector.
Under the scheme, the SBP provides financing to banks for onward extension of financing at maximum end-user rate of 7% for 10 years, the central bank elaborated.
The maximum financing for a single project under the scheme is Rs5 billion. "The objective of this facility is to boost economic activity through investments in manufacturing units," it said.
"While allowing BMR and expansion of existing projects, the SBP has allowed financing for the purchase of new imported and locally manufactured plant and machinery against foreign letter of credit and inland letter of credit."
The funding under the facility cannot be used for procurement of second-hand machinery, land or carrying out civil works.
Published in The Express Tribune, May 9th, 2020.
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