ISLAMABAD: The government on Tuesday approved nearly Rs8 billion supplementary budget to meet additional needs of the Pakistan Air Force (PAF) and civilian armed forces, seeking financial assessment of further defence needs of the country in wake of tensions with India.
The Economic Coordination Committee (ECC) of the cabinet approved the additional budget for the PAF and management of western borders by civil-armed forces, said the Finance Ministry officials.
It has been decided to give around Rs8 billion for various purposes and nearly half of it would go to the PAF. The remaining amount is being approved for the Pakistan Rangers, civil armed forces and to pay to banks for marketing Pakistan Banao Certificates (PBC).
The ECC approved to give minimum Rs180 million or 0.75% of the total investment in the PBC –whichever is higher, to a consortium of banks that would market these certificates.
The ECC chairman, who happens to be Finance Minister Asad Umar, also directed the Ministry of Interior to analyse the defence needs of the armed forces and inform the government so that it may make required allocations.
The ECC directed a committee setup by Prime Minister Imran Khan to give its report on the needs of the armed forces. The decision to approve the additional budget for the country’s armed forces has been taken a week after skirmishes between India and Pakistan.
Last month, the federal cabinet had authorised the ECC to first clear all the supplementary grants before these are presented to the federal cabinet for approval. Earlier, Umar had returned the powers to issue supplementary budgets to the federal cabinet, which were grossly misused during the PML-N tenure.
The ECC also approved the supplementary budget for capacity enhancement of the civil armed forces for management of the western borders. The government has started various projects for capacity enhancement of civil armed forces through raising of additional wings of Frontier Corps Balochistan.
The ECC approved Rs1.8 billion supplementary budget for Ministry of Interior to largely meet the needs of Pakistan Rangers and repair of security cameras.
Pakistan Banao Certificates (PBC)
In a surprise move, the ECC also approved to give minimum Rs180 million or 0.75% of the total investment in the PBC to a consortium of banks that would market these certificates.
The decision is contrary to the initial statement by the Ministry of Finance that had decided to keep the banks out of the PBC launch and marketing exercise.
On January 31, the government had launched the US dollar denominated certificates to raise funds for balance of payments support. It has offered 6.25% interest rate on three-year investment and 6.75% on five-year investment to both resident and overseas Pakistanis.
As of February 20th, the State Bank of Pakistan (SBP) processed 111 applications with an investment of $3.5 million, the ECC was informed. Another 754 applications involving $16.2 million investments are in the pipeline. So far, 865 people have come forward to invest $19.7 million.
The government had launched the certificates through a website, regulated by the central bank. However, now it argued that there was a need to involve banks to market these certificates. Usually, the marketing exercise is done before the launch of any bond.
The SBP has selected a consortium of six banks, Habib Bank Limited, United Bank Limited, National Bank Limited, Habib Metro Bank, JS Bank and Standard Chartered Bank for marketing the certificates, according to the Finance Ministry.
The Ministry of Finance has engaged the services of these banks till June 30, 2019 and would pay them Rs180 million or 0.75% of the total value of the PBC sold, whichever is higher. Any expenses on conducting road shows and paying any fee would also be borne by the federal government.
Since there was no money in the budget to pay for these expenses, Asad Umar approved the Rs180 million initial supplementary grant to meet these expenses. The Rs180 million will be paid by cutting the subsidies budget.
The ECC also approved Rs769 million technical supplementary grant for construction of training centres of Fata Levis and upgrading of the Federal Investigation Agency (FIA) Lahore Office. There will not be additional burden on the exchequer, as the US government would provide funds for these projects.
Additional LNG Terminal
The ECC also directed to complete all codal formalities for construction of new LNG terminal.
The Ministry of Maritime Affairs had proposed to approve Jharri Creek site for setting up new terminal, and the future terminals should be built on Build-Operate-Transfer model without involving the government guarantees.
The Ministry of Maritime Affairs had decided that no new terminal will be built at the existing site of the Port Qasim Authority to avoid congestion. A technical study to identity an LNG zone was under way that would complete in six months.
The finance minister also directed the Petroleum Division to start discussions with the Oil and Gas Regulatory Authority (Ogra) for determination of new gas prices with effect from July this year.
The ECC approved allocation of 9MMCFD gas from Fazl X-I filed to M/s SSGCL for a period of ten years for provision to Hala Joint Venture.