Friday, October 1, 2010

Major crop losses reach Rs281bn: SBP

The State Bank said on Thursday the direct losses of major crops had reached Rs281 billion as the floods hit hard the agriculture sector that could lead to adverse economic outcomes.
State Bank of Pakistan Governor Shahid H Kardar, while speaking at a roundtable discussion on ‘Damage Assessment of Floods and Implications for the Financial Sector’ arranged by the bank on Thursday, said the country will not be able to face this situation alone.

He said the floods had caused widespread devastation in 78 districts across the country with huge losses of wealth in the form of crops, livestock, roads, infrastructure, and public and private buildings.

Moreover, the floods have rendered about 20 million homeless and posed serious health risks for the victims.

“The agriculture sector, which accounts for 21 per cent of GDP and 45 per cent of employment, has been particularly hard hit and the direct losses to major crops have been estimated at Rs281 billion by the federal ministry of food and agriculture and Suparco,” said Mr Kardar.

In addition to agriculture, the manufacturing sector, which depends on agricultural inputs, has also been adversely affected, he added.

“These developments will lead to adverse economic outcomes, with anaemic growth and higher inflation. Pakistan will not be able to address these issues alone and will need external support,” he said.

He said that the State Bank had constituted committees in the areas of SMEs, microfinance and agriculture and general relief work to develop a strategy for the settlement of existing loans and provision of fresh credit in the affected areas.“These committees have recommended write-offs of existing loans, where prospects of recovery are slim, restructuring or rescheduling of lending; refinance facilities for fresh lending and subsidy on associated financial charges,” said the governor.

The State Bank in consultation with the federal government and donors has decided for deferral of loan repayment for 2 years – restructuring or rescheduling of overdue loans.

It is also decided to reduce mark-up for 2 years provided the interest differential between the mark-up charged and KIBOR (Karachi Inter-Bank Offered Rate-for banks), or average market rate (for MFBs - mirco finance banks) is borne by the government of Pakistan (GOP) for the period.

The State Bank decided for exemption from additional provisioning requirements for one year.

The SBP will create provision for fresh credit at subsidised rate through the SBP refinance window for 2 years at 8 per cent per annum with a bank spread of 3 per cent.

It also decided for credit guarantee schemes on a 30 per cent first loss sharing basis with funding support of GOP and multilateral agencies. 


No comments:

Post a Comment