–‘Banks will have to bear the burden of more non-performing loans, deferred mark-up payments, lower capital gains etc.’
–‘Exports to suffer the most as trading partners are in a complete lockdown’
LAHORE: The outbreak of novel coronavirus (Covid-19) has so far inflicted a loss of Rs30 billion on Pakistan’s economy, Pakistan Today has learnt.
“This figure might go up to Rs1.3 trillion or more in the next few months if the situation doesn’t improve or if we continue to impose lockdowns across the country,” said economist Dr Qais Aslam while talking to this scribe. “Covid-19 can affect the employment of 10 million people in the next six months and you can well imagine the toll it’s going to take on income, employment, health and Gross Domestic Product (GDP) in a year’s time.”
Meanwhile, renowned tax consultant Dr Ikramul Haq said that in Pakistan, the economic toll of this outbreak would be substantial.
“It will take years to recover from this jolt. For example, the banking industry is in profit and under the prevalent circumstances, it is at the forefront in providing uninterrupted seamless services. However, banks, like other service sector entities and businesses, are suffering immensely due to lockdowns and other economic difficulties.”
Dr Haq feared that due to slowdown caused by the virus, the banks would have to bear burden of more non-performing loans, deferred mark-up payments, lower capital gains or higher capital loss due to emerging stock market position, lower import and export business, higher operating cost and additional expenses to provide COVID-19-free healthy and safe workplace, provision of free online services etc.
“Exporters will suffer due to cancellation of orders as their clients are in those countries where supply chains are disrupted and there is contraction in demand,” he opined.
Dr Haq pointed out that nobody in Pakistan has highlighted till date what China has offered as a tax package to help domestic businesses hurt by the deadly corona outbreak.
He said the Rs1.2 trillion relief package announced by the PM was not only delayed but offered no meaningful tax incentives to the affectees of the outbreak.
Agreeing with Dr Haq, leading industrialist Waleed Tariq Saigol said that the impact of COVID-19 on the country’s economy would be devastating. “Our exports are going to suffer badly because our trading partners are in a complete lockdown. The longer that continues, the greater the potential impact will be on export companies and their ability to service their loans.”
He noted that in the West, governments were stepping in to facilitate the masses; the US Federal Reserve had stepped in to shore up the credit markets through an unprecedented rescue package for the entire economy.
“But who will carry this burden in Pakistan? Just changing reserve requirements and loosening up provisioning regulations is not enough by any means. The government has to step up and literally save the private sector and ultimately the banking sector, which will bear the brunt of this pain,” Saigol said.