Banks deferred Rs.651 billion loan payments for one year: IMF

ISLAMABAD: The International Monetary Fund (IMF) has said banks deferred a total of Rs. 651 billion of principal on loans for one year to maintain the banking system and sustain economic activity.

This was done under the State Bank of Pakistan’s (SBP) temporary regulatory measures due to the coronavirus pandemic.

In a report of IMF, ‘Policy Actions Taken by Countries’ stated that the economic activity worsened notably, and growth is preliminarily estimated at 0.4 percent in the fiscal year 2020. A gradual recovery is expected in the fiscal year 2021 as the economy reopens, it added.

The report stated that SBP responded to the crisis by cutting the policy rate by a cumulative 625 basis points to 7.0 percent since 17th March. SBP has expanded the scope of existing refinancing facilities and introduced support hospitals and medical centers to purchase equipment to detect.

Read more: Coronavirus may narrow current global imbalances: IMF

Stimulate investment in new manufacturing plants and machinery and incentivize businesses to avoid laying off their workers during the coronavirus pandemic.

The State Bank introduced temporary regulatory measures to maintain banking system soundness and sustain economic activity. More recently, it introduced mandatory targets for banks to ensure loans to the construction sector accounts for at least 5 percent of the private sector portfolios by December 2021.