The Central Bank’s short-term Road Map unveiled yesterday listed 20 specific initiatives in the next six months to stabilise the economy and boost growth. They are as follows:
Intervene in the FX market by providing the funds to finance the country’s energy bills, and thereby to infuse liquidity
Promote investments in rupee-denominated Government securities with a guarantee on the exchange rate
Strengthen mandatory conversion of export proceeds
Request the Government to tax profits of exporters at 28% and not 14% where forex is not repatriated and converted
Expand the moratorium while also providing liquidity support to affected finance companies
Stop parate executions and repossession of vehicles in the next six months for pandemic-affected borrowers
Share the burden of pandemic losses suffered by local SMEs by allocating Rs. 15 billion towards interest accrued, through a mechanism which is to be worked out
Use monetary policy tools to unwind monetary stimulus extended during the pandemic
Use macroprudential tools as well as microprudential regulation and supervision to guide the financial sector towards sustained stability
Facilitate education and health-related forex outflows immediately
Lift the ceiling imposed on outward investment and migration allowances in January 2022
Discontinue cash margin deposit requirements on “nonessential/non-urgent imports” with immediate effect
Establish the International Transactions Reporting System (ITRS) to monitor foreign exchange transactions commencing 1 January 2022
Monitor services related foreign exchange inflows and ensure due repatriation and conversion
Replace maturing debt obligations with new inflows through non-debt sources, wherever possible
Consider the possibility of buying back the entire issue of ISBs maturing in January 2022 and/or July 2022, if high discounts are prevalent in the market
Replace maturing ISBs with Government-to-Government loans until ISBs/GDP ratio declines to 10% or less
Take measures to improve sovereign ratings
Strengthen workers’ remittances through official channels
Encourage forex transactions through formal channels with the restoration of licences of money changers
(FT)