According to data released by the National Bank of Pakistan (SBP) on Tuesday, banks provided record financing to small and medium-sized enterprises (SMEs) in the 2018 calendar. The report stressed that SMEs recorded Rs. 513.1 billion, up 14% from Rs 450 crore in 2017. This growth has increased by 25% in July and December. SMEs contribute 30% of the country's gross domestic product (GDP) to provide employment opportunities for over 80pc non-farm workers and generate 25pc of export income. The SME sector has huge potential for job creation and poverty eradication, the central bank said.
SME Financing Reaches Record
The increase in funding appears despite an increase in interest rates. The SBP said that the increase in SME financing meant a greater sense in light of the fact that the policy rate in 2018 showed an upward trend. The substantial increase in funding is mainly due to the implementation of SME financing policies issued by SBP in December 2017. The central bank emphasized the need for SME financing, as this sector is considered the backbone of the national economy and creates higher employment opportunities than large enterprises.
The SBP said that SME growth policies aim to create a regulatory environment, set financing targets for banks and development financial institutions (DFIs), and allow banks to adopt SME financing as a viable business proposal. The Bank has advised SBP to provide non-financial advisory services to SMEs to banks, simplify the financing process for SMEs, and introduce new refinancing schemes for SMEs through banks and DFI.
So far, according to policy, the central bank's training institutions have trained more than 2,500 bankers through intensive training," the bank said. Likewise, awareness was formed among more than 20,000 stakeholders, including SMEs, through the special programs that SBP performs. The impact of the central bank's intervention has led to a significant increase in banks 'SME financing, and SMEs' portfolio of SMEs decreased by 2.3% over the previous year. The Pakistani government also provides full support to promote the SME sector.
The actual tax incentives for banks on gradual financing of SMEs, as announced in recent economic reform legislation, are consistent with actions identified in the government's 100-day timeline. This will encourage banks to meet the funding needs of SMEs.
Rs806m development projects Approved
On Tuesday, the Central Development Working Group (CDWP) approved four projects worth Rs. It has also approved two projects worth Rs 740.46 billion in the Ecnec Executive Committee. This meeting, chaired by Makhdoom Khusro Bakhtyar, Minister of Planning and Development, discussed projects related to water, health, planning and housing. CDWP approved Rs67.41m for feasibility study and detailed design of Pishin Lora's Burj Aziz Khan Dam project. The proposed dam will design a short reservoir of MGD (23 million gallons per day) and supply 21MGD of drinking water to Quetta City.
The meeting discussed the Kachhi Canal project. Considering the technical aspects of the project, the minister of planning has established a committee to conduct a detailed review of the projects submitted within 15 days. Speaking about the project, he said the canal would irrigate millions of acres of land in the Dera Bugti district, promote agricultural production in the region and provide clean drinking water to the community. In the health sector, the Ministry of National Health Services, Regulation and Coordination announced four projects of the Islamabad Pakistan Institute (PIMS).
The first approved project is an upgrade of existing facilities in PIMS Islamabad (equivalent to Rs200m). The second approved project involves building a female doctor hostel in PIMS (RMS 222.1m). The third project involves the procurement of MRI equipment from the PIMS Radiology Department and costs Rs316.73m. A fourth project of Rs. 4,886.6 million was submitted to Ecnec for approval in connection with the expansion of the intensive care unit of the Mother and Child Health Center of PIMS.
In the physical planning and housing sector, the CDWP recommended four sewage treatment plants and associated sewer construction projects to treat the wastewater falling into the Korang River, Rawal Lake and Ecnec in areas with an Islamic value of 3,518 meters. The project aims to control pollution from untreated sewage that flows directly from the adjacent settlement to Islamabad Royal Lake through the installation of sewage treatment facilities.
The meeting was attended by the Planning Minister of Zafar Hasan, CDWP members and senior officials from all relevant federal and local government departments.
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