Impact of COVID-19 on Small Businesses: Measures Taken by Government of Pakistan and State Bank of Pakistan

Abstract

The purpose of the study is to assess the impact of COVID-19 on the global economy and to identify the real issues being faced by the general public and small businesses during the suspension of economic activities in specific context to Pakistan. The main objective of the study was to explore the measures taken by the Government of Pakistan and the central bank to combat the impact of COVID-19 on economic growth and employment with a special focus to support SMEs through refinancing schemes. The qualitative research method was used to answer the research questions. The relevant documents i.e. research articles, books, web portals of concerned banks and FIs were thoroughly reviewed. To highlight real issues faced by small businesses and common people, interviews were conducted from representatives of SMEs.The findings of the study will certainly be helpful for the government, central bank, and other policymakers to handle the diverse situation prevailing due to the spread of COVID-19 in view to take future measures. The study can also be used as an awareness tool for refinancing schemes introduced by SBP to support businesses and employment while economic hardship.The study revealed that Government of Pakistan and the central bank has taken a range of extraordinary measures to control the impact of COVID-19 on economy. SBP introduced various refinance schemes to fight the impact of COVID-19 on small businesses and approved 232 billion loans for wages and 8 billion loans for hospitals. Moreover, 655 billion loans have been deferred & 200 billion loans were restructured, and 8.8 billion loans have been approved for investment. Similarly, GoP supported 12 million families by providing Rs. 12,000 per family with Rs.144 billion as the total budget. However, GoP and SBP need to revisit their policies and programmes to make them more accessible for SMEs and common persons.