Businessmen and small and medium enterprises (SMEs) have urged the State Bank of Pakistan (SBP) to extend deadline for the Refinance Scheme for Payment of Wages and Salaries, launched to support businesses in retaining employees and prevent layoffs due to the Covid-19 outbreak in Pakistan.
In a statement on Tuesday, Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Mian Anjum Nisar appreciated the central bank for introducing the scheme, which helped several industrial and service-oriented units to keep their employees during the pandemic.
He demanded that the State Bank consider extending the refinance scheme to December 31, 2020. It is pertinent to mention that the central bank is set to discontinue the refinance scheme on September 30 this year.
“Since the companies that availed themselves of this facility have not yet recovered from the devastating economic impact of Covid-19, we advise the Ministry of Finance to assist the SBP and extend this scheme till the end of year,” he said.
He added that in many countries, the second wave of coronavirus had begun and Pakistan should be prepared to take precautionary measures in view of increase in the number of daily Covid-19 cases.
Discontinuation of the facility on September 30 would not serve true purpose of the scheme, Nisar stressed.
He was of the view that the Ministry of Finance and SBP needed to review the prevailing economic situation before discontinuing the credit facility because small and medium-sized businesses had not been able to regain the pre-Covid-19 stability.
“Furthermore, the documentation process and furnishing employees’ data to get the credit facility is also a time-consuming task,” he said. “Therefore, withdrawal of this facility at this stage will neither be in the interest of private sector nor in the interest of the government that aims to contain rising unemployment in the country.”
Speaking to The Express Tribune, Union of Small and Medium Enterprises (Unisame) President Zulfikar Thaver also requested authorities to extend the facility till the end of the year.
Apart from Covid-19, nationwide floods had also caused a great setback to the supply chains, he said, adding cotton and vegetable crops had been destroyed, resulting in loss of raw material for the textile sector as well as export earnings from agriculture.
According to him, the SME sector and small-scale farmers were hit the worst.
Latest figures from the State Bank show that various businesses have got the facility of deferring loan payments worth Rs651 billion so far. The data revealed that as of September 25, 2020, loans worth Rs186.7 billion had been restructured.
On demand of the business community and to stabilise the economy, the SBP reduced the policy rate by 625 percentages points from 13.25% in March 2020 to 7% at present.
“Refinance scheme should definitely be extended because it will help industries recover from the losses suffered on account of the pandemic,” said Arif Habib Limited Head of Research Tahir Abbas.
“When global economies recover completely (once the second wave is over), only then our trade numbers will reflect and reap actual dividends of these schemes meant to support trade and business.”
Published in The Express Tribune, September 30th, 2020.