Fostering Economic Growth

The COVID pandemic created a major stranglehold on the global as well as the domestic economy in Pakistan. When the first lockdown was announced in March 2020, it was essential for the government to ensure that the poorer individuals and small businesses, that rely on daily financial transactions in terms of wages and sales, are provided with the means necessary to support them during such challenging times. The SBP started various measures to ensure that daily wage earners were prevented from layoffs and provided temporary economic relief packages to boost investment. The SBP supported the health sector to combat the virus and introduced a debt restructuring scheme that provided an opportunity for borrowers to defer their payments.

Further, the government reduced the policy rate by 625 basis points in order to encourage borrowing and investments. Other measures included ensuring availability and continuity of financial services such as uninterrupted access to ATMs and promoting digital payments that reduce physical interaction between banks and their customers. Further, the SBP relaxed credit requirements for importers and exporters to ensure that traders can at least incur lower financial costs as they otherwise struggled during the pandemic. The SBP also ran the Prime Minister’s COVID-19 Pandemic Relief Fund by accepting donations through the banking system and eliminating service fees on payments by the donors.

The SBP also introduced a digital banking solution for non-resident Pakistanis who are willing to undertake banking, commercial, payment and investment activities in Pakistan. Now non-resident Pakistanis can open a Roshan Digital Account (RDA) in foreign currency, enabling them to utilize various financial facilities that were previously limited mainly to Pakistanis residing within the country’s borders. The efforts to formalize financial activities by Pakistani non-residents has increased worker remittances by more than $3.8 billion in CY20 over the value reported in CY19. This is essential as it has helped strengthen the external account at a time when the country was facing a balance of payments crisis. The efforts of the SBP can continue to pay significant dividends.

The SBP functions as an important repository for economic data that gauges conditions of the business and economic environment in Pakistan. Apart from the data on the financial and monetary sector that is expected from a central banking authority, the SBP provides data on the external sector as well as the real estate sector. It accumulates data on several variables from the Pakistan Bureau of Statistics (PBS). However, it is important to mention that data is not presented in the most user-friendly and ready-to-use format as the user has to scrape through several Excel sheets and PDFs in order to compile the data. There are several examples of data repositories that can be followed in order to help researchers obtain information in the most easy to use format.

The SBP also conducts various surveys to measure the economic conditions as perceived by important stakeholders. The Business Confidence Survey and the Consumer Confidence Survey undertaken in collaboration with the Institute of Business Administration (IBA), Karachi are important tools that provide deeper insights into the patterns of economic activities in Pakistan. The SBP also conducts the Bank Lending Survey and the Price and Wage Setting Survey. The surveys provide the necessary information useful to set the discount rate every two months. This is a major policy tool that sets the direction of Pakistani economy in terms of its growth levels.