More Clarity on Relief Package Needed

As the country moved towards a lockdown because of surging Coronavirus cases, expectations of a relief package from the government for providing much-needed support to the economy grew. The ‘wish-list’ was quite expansive; from massive reduction in POL prices to funding of utility stores and from relief for Small and Medium Enterprises to support for exporters. At least, in our view, the sizeable package worth Rs1,055bn (US$6.6bn) announced on Tuesday was as close to a mirror image of the wish-list as realistically possible. Note that this amount does not include the revenue loss from passing on the impact of lower oil prices, the funds that may be required for shelter homes’ expansion and reduction/elimination of taxes on essential food items such as pulses, sugar and ghee.
Furthermore, the whispers of a rate cut got louder during trading hours of Tuesday with word of an emergency SBP’s monetary policy committee (MPC) meeting. Following the government’s announcement of the fiscal stimulus, the SBP stepped in with a cherry on top in the form of a 150bps cut in the policy rate. Read More…


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