KARACHI: Amid delays in export orders and dampening consumer and producer sentiments, the State Bank of Pakistan (SBP) on Tuesday announced refinance scheme worth Rs100 billion for investors planning new projects to help counter economic slowdown caused by the coronavirus pandemic.

Launching the Temporary Economic Refinance Facility (TERF) at the Monetary Policy Committee meeting, SBP Governor Reza Baqir said the banks will extend financing for setting up plants and machinery at a fixed rate of 7pc for a period of 10 years capping per project maximum loan at Rs5bn.

“Companies will have until March 31, 2021 to open letter of credits to avail this credit facility and can be accessed by all manufacturing businesses except for the power sector,” the governor elaborated.

He also said the central bank was in contact with the banking sector to ascertain the impact of coronavirus on the loan repayments.

Financing for hospitals: The SBP governor also unveiled a Refinance Facility for Combating Covid-19 (RFCC) to help hospitals and health care facilities engaged in containing the spread of coronavirus across the country.

“This scheme will extend financing to hospitals and medical centres registered with the provincial or federal health agencies at 3pc. The medical establishments can avail this facility for purchase of equipment to detect, contain and treat the coronavirus,” Reza said.

The total size of the scheme has been set at Rs5bn with a maximum financing limit per hospital of Rs200m.

Answering a question Reza said the central bank will expand the size of these schemes after evaluating the initial response.

Advisory to banks: Meanwhile, the SBP also proposed measures to help fight the spread of coronavirus across all the branches of banks, development financial institutions and microfinance institutions.

Through a notification the SBP advised all the financial institutions to create awareness among the employees of the financial sector and customers regarding COVID-19 and implement guidelines issued by the government and take precautionary measures to reduce contact with currency notes and other financial instruments.

It also advised reassessment of business continuity plans in the existing situation and develop suitable remedial plans, carry out an impact analysis to assess the consequences on business and operations and enhance the monitoring frequency of key risk areas like credit, capital market and foreign exchange exposures; and reaching out to the key payment and settlement system partners such as NIFT, 1Link, NCCPL and CDC to ensure continued availability of their services.

Published in Dawn, March 18th, 2020