SBP extends time for settlement of foreign currency loans

In an effort to support industries amid the Covid19 pandemic, the State Bank of Pakistan has extended the time for settlement of foreign currency loans to 180 days, the central bank stated in a short statement.

Exporters and importers can now settle their export and import loans under the FE-25 Scheme with an extension of up to 180 days.

Banks can now allow extension up to 180 days to exporters in settlement of their FE-25 loans in case they are facing delay in realization of export proceeds due to Covid-19.

In addition, banks can also allow settlement of FE25 loans to exporters through substitute contract during the extended period of 180 days, where the original export contract has been cancelled due to Covid-19.

The SBP has also allowed banks to extend the maturity of FE-25 import loans by 180 days. This facilitation has been provided to exporters and importers for their foreign currency loans maturing up to September 30, 2020.

"The State Bank reiterates its unflinching resolve to continue working with all stakeholders to provide all needed facilitation in these uncertain times in the larger interest of the people of Pakistan," the statement read. The country received record high remittances of $2.768 billion in the first month of the new fiscal year, following the record $23bn remittances during the outgoing financial year.

"This ($2.768bn) is the highest-ever level of remittances in a single month in Pakistan," the State Bank of Pakistan (SBP) said in its latest data issued on Monday.

Prime Minister Imran Khan took to Twitter soon after the SBP announcement and said: "More good news for Pak economy. Remittances from overseas Pakistanis reached $2,768 mn in July 2020, highest ever amount in one month in the history of Pakistan. This is 12.2% increase over June 2020 and 36.5% increase over July 2019."

In terms of growth, workers' remittances increased by 36.5 per cent over July 2019 year-onyear basis and 12.2pc over June 2020 (month-onmonth), the SBP said, adding that given the Covid-19 impact on the global economy, this increase was encouraging.

PM welcomes 'good news' for economy Though the export of manpower is almost zero after the novel coronavirus hit the country in March this year, the inflows of remittances have risen. The State Bank attributed the growth to the Pakistan Remittance Initiative, which is what it has always credited whenever remittances rise, as well as exchange rate movements. Financial sector players and currency dealers said Pakistanis sent more money to their families and other relatives to help them tide over Covid19 challenges and support those members who lost jobs and businesses.

The SBP reported that the highest amount of remittances were received from Saudi Arabia, while in terms of percentage the highest growth was noted in inflows from European Union countries.

Pakistan received $821 million from Saudi Arabia in July this year, compared to $470m during the same month last year, an increase of 74.5pc. The country has been receiving the highest remittances from Saudi Arabia for the past several years as about one million Pakistanis are employed there.

The second biggest remittances of $538m came from the United Arab Emirates, showing a growth of 26pc compared to the same month last year. A significant growth of 31.7pc was noted from the United Kingdom as Pakistanis living there sent $394m remittances in July.