During the ongoing Fiscal year, The State Bank of Pakistan’s Temporary Economic Refinance Facility (TERF) will raise the investment-to-GDP ratio by almost one per cent. Furthermore despite the Covid-19 pandemic as approvals of long-term concessionary investment loans under it have already reached Rs430 billion.
Moreover, SBP Governor Dr Reza Baqir Gave out a detailed statement saying “The key purpose of TERF was that we didn’t want our businessmen to postpone their investment decisions during the pandemic. We wanted to provide them with incentives to not postpone their [planned] investments.” Alternatively, The central bank had introduced the concessionary refinance scheme to facilitate investment in new industrial projects, as well as capacity expansion and replacement of old technology by the existing ones.
Baqir Further elaborated his concerns by saying, “When a crisis like (the) Covid-19 strikes, one of the immediate consequences is that there is uncertainty. There’s uncertainty on the part of everybody, especially on the part of the businessmen because they have to decide based on their expectations of the future. And if that expectation about future has more uncertainty the instinct is to delay the decision.”
A breakdown of the authorised loans stipulates that 30pc TERF financing has gone directly into new projects while the remaining amount is being used for expansion/BMR through new investment. The textile industry has emerged as the largest borrower with almost 50pc share in the overall approved financing followed by FMCG (Fast Moving Consumer Goods) and auto sector with 11pc each.
Hence, the data portrays that at least Rs58bn has so far been disbursed under TERF.