ISLAMABAD – The State Bank of Pakistan on Tuesday announced yet another cutin the interest rate, this time slashing it by 1.5% to 11%, saying therewas “considerable uncertainty” over the impact of the coronavirus pandemic.
In a press release, it said the move — almost a week after the policy ratewas cut by 75 basis points to 12.5% — was aimed “to facilitate businessesand exporters who seek loans frequently from commercial banks to run theirbusinesses”.
“The global economy has been hit hard by the coronavirus, with the pandemiccausing several businesses, including restaurants, hotels, airlines andmanufacturing businesses to record losses in billions,” it added.
The central bank mentioned that the Monetary Policy Committee (MPC) tookinto account the “considerable uncertainty about how the Coronavirusoutbreak would impact the global economy and Pakistan”.
“Substantial new information on global and domestic developments has becomeavailable since the last MPC meeting,” it said on Twitter. “Thedevelopments discussed during the meeting imply that the outlook for growthand inflation in Pakistan is likely to be revised down further.”
Earlier, the SBP had said it introduced various policy measures to protectthe public given the looming potential economic impact amid the COVID19outbreak.
It said it had created a dedicated page for the new measures.
A day prior, the SBP had informed public that banks across Pakistan wouldremain open but with critical staff and limited timings to ensureoperations continued.
It said in a circular: “All branches/ work places will remain open,throughout Pakistan with bare minimum staff for ensuring the continuity ofessential banking services.
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“Under this arrangement, from March 24, 2020, branches/ work places willopen (from Monday to Friday) at 10:00 am and close at 4:30 pm till furtherinstructions by SBP,” it had added, noting that should a COVID-19 caseemerge at any branch, it should be closed temporarily after intimation tothe relevant authorities.
Measures amid virus panic
Last week, the central bank had also introduced two key measures, apartfrom the interest rate cut, to facilitate the coronavirus-hit Pakistanieconomy and encourage investment at the same time.
It said they were aimed at tackling “the economic and health challengesposed by the spread of COVID-19”, or the novel coronavirus.
The new measures include a “Temporary Economic Refinance Facility (TERF)”and a “Refinance Facility for Combating COVID–19 (RFCC)” — both accompaniedwith their Shariah-compliant versions.
The TERF targeted stimulating new investment in manufacturing, whereas theRFCC aims at providing support to hospitals and medical facilities infighting the coronavirus pandemic.
