Financial relief

The Prime Minister has announced a financial assistance package to cope with the adverse impact of the coronavirus pandemic on the country’s economy. The assistance package is mainly meant to cater to the poor and low-income segments of society as well as businessmen and traders. The former category — which, even in normal circumstances, finds it tough to make both ends meet — is further troubled due to a near halt in commercial activity in the country in the wake of the coronavirus outbreak. And the latter category is suffering from a significant loss of business due to a global economic slowdown as a result of the mushrooming virus that has now spread across the whole world — literally.

Coupled with a 1.5% cut in the policy rate that was announced separately by the SBP, the financial assistance for big manufacturers and exporters as well as small and medium industries and agriculture sector is a step in the right direction. It has been generally welcomed by the business fraternity, with many of their representatives agreeing that it is a good beginning towards creating a favourable business climate in the country. An “immediate” tax refund of Rs100 billion; another Rs100 billion for SMEs and agriculture sector; Rs15 per litre cut in the prices of petrol, diesel and kerosene that will also bring down the power tariff, and thus the cost of doing business; as well as the fall in the interest rate to 11% make up a decent package.

And the relief announced for the country’s most vulnerable social class — the one that is hit the hardest in the prevailing circumstances — is not sufficient though, it is pretty passable. The package includes Rs200 billion for labourers; Rs150 billion for low-income families to be distributed as Rs3,000 in cash monthly for a period of four months; Rs50 billion for utility stores to ensure availability of food and other necessities all the time; and of course a cut in the prices of petroleum products which will cost the government Rs75 billion. But with the country highly likely to be heading towards a complete closure — whether it is interpreted as a lockdown or a curfew — much more needs to be set aside by the government for the people. 

Published in The Express Tribune, March 26^th, 2020.

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