KARACHI: The Temporary Economic Refinance Facility (TERF) has recorded the highest increase of Rs51 billion during one week, which ended on January 28, while the total amount has reached over Rs374bn.

The TERF facility had been introduced to counter the negative impact of Covid-19 on the economy.

The State Bank of Pakistan said the TERF had shown significant growth over the last 10 months, as reflected by increase in requested amount from Rs36.1 billion by the end of April 2020 to Rs687.4bn by Jan 28, 2021, while over the same period approved financing has reached Rs374.3bn. So far, 450 projects have been approved under the scheme.

The SBP made a few amendments to the scheme since its launch in March 2020 that has positively impacted the uptake of the scheme. The reduction in maximum end-user rate from 7pc to 5pc on July 8, 2020 resulted in bringing significant increase in number as well as amount of requests in following months.

Under the TERF, the financing is provided for purchase of new imported and locally manufactured plant and machinery for setting of both new and existing projects, businesses to undertake Balancing, Modernisation and Replacement (BMR) and expansion.

The SBP provides refinance to banks at 1pc with maximum 4pc margin of banks for the scheme.

The funding under the facility cannot be used for procurement of second-hand machinery, land or carrying out civil works. Under the TERF, the financing is allowed for purchase of new imported and locally manufactured plant and machinery only against LC and inland LC.

Besides, the SBP has also allowed the TERF facility in cases where LCs or Inland LCs were opened earlier but retired after the introduction of the scheme on March 17, 2020.

Published in Dawn, February 11th, 2021