ECC approves Rs1.2tr stimulus package

Handout says govt will provide Rs146b for emergency relief fund


Shahbaz Rana March 31, 2020
People gather to receive ration handouts from a charity truck, during a lockdown after Pakistan shut all markets, public places and discouraged large gatherings amid an outbreak of coronavirus disease (COVID-19), in Hyderabad. PHOTO:REUTERS

ISLAMABAD: A cabinet committee on Monday approved ‘Rs1.2 trillion’ economic relief package to shield the economy from the adverse effects of the pandemic.

“The Economic Coordination Committee (ECC) of the cabinet approved the fiscal stimulus package of Rs1.2 trillion,” said a handout issued by the Ministry of Finance after the meeting.

However, the handout provided details of only Rs534 billion, including payments of tax refunds.

Some ECC members objected to bringing half-baked summaries at the forum of the cabinet body.

Out of Rs534 billion mentioned in the finance ministry handout, the government will provide an additional supplementary budget of Rs146 billion to set up emergency relief fund, pay duty drawbacks by the commerce ministry and partially pick the salaries cost of the Ministry of Railways employees being affected by the suspension of train services.

As against the prime minister’s decision to disburse Rs350 billion among the needy, daily wagers and the poorest segment of society, the ECC approved-package mentioned only Rs230 billion, showing a gap of Rs120 billion between what PM Imran Khan had announced and the package finalised by the line ministries.

As against the PM’s decision to give additional Rs150 billion from the budget through the Benazir Income Support Programme, the ECC approved channelling only Rs73 billion from the existing BISP budget.

Similarly, the PM announced Rs200 billion for daily wagers but the ECC approved a three-month total package of Rs157.5 billion.

The sources said ECC Chairman Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh directed the ministries concerned to finalise modalities of the package in the next few days.

The ECC only approved figures, leaving the rest of things to the line ministries to finalise.

However, the economic relief package is also on the agenda of the federal cabinet, which is meeting today (Tuesday).

It is to be seen whether the federal cabinet approves a half-baked package or returns the summary to the ECC for fine tuning.

“The purpose of the ECC meeting was to fulfil the necessary requirements for different relief measures already announced by the prime minister for the public due to the ongoing coronavirus pandemic,” stated the finance ministry.

The ECC approved Supplementary Grant of Rs100 billion for the "Residual/Emergency Relief Fund" in terms of Article 84(a) of the Constitution for the provision of funds to mitigate the effect of COVID-19, said the Ministry of Finance. But it did not provide mechanism about spending this money.

BISP

The special package for providing relief to the poor through cash assistance under the Ehsaas Programme was also approved by the ECC, said the finance ministry.

The package shall provide cash grants to 12 million families under the regular “kafalat programme” and Emergency Cash Assistance on the recommendation of the district administration.

The assistance will be provided for four months and in addition to the BISP beneficiaries it will be a one-time dispensation: the cash will be provided either in one instalment of Rs12,000 through Kafalat partner banks i.e., Bank Alfalah and Habib Bank Limited after biometric verification or it may be provided in two instalments of Rs6,000 each.

“The Poverty Alleviation Division was asked to present both options with feasibilities. The partner banks may be asked to make arrangements through branchless banking networks to disburse cash,” said the finance ministry.

“The Rs72.9 billion of additional funds through technical supplementary grant would be given to the BISP under "Ehsaas Cash Assistance Package in Response to COVID-19 Pandemic”, said the ministry.

Labour package

After the Ministry of Industries and Production presented a comprehensive proposals regarding targeting parameters, implementation mechanism, cash assistance per family per month and financial phasing of the programme, the ECC approved Rs200 billion of cash assistance for daily wagers working in the formal industrial sector and who had been laid off as a result of the COVID-19 outbreak, said the finance ministry.

It was estimated that around three million workers will fall in this category and they will have to be paid a minimum wage of Rs17,500 per month.

“The estimated cost of this provision for daily wagers comes to around Rs52.5 billion a month,” which comes to Rs157.5 billion for three months.

The provincial labour departments shall ensure the delivery of assistance to the laborers while the provision of funds shall be the responsibility of the federal government.

“The ECC directed that immediate consultation with the provincial labour departments( mentioned under the provincial rules of business) may be carried out for providing timely assistance to those who are in need,” according to the finance ministry.

USC package

The ECC approved Rs50 billion for the Utility Stores Corporation to provide essential food items to the vulnerable section of society at subsidised rates.

The USC has prepared an initial plan to deliver nine essential food items at Rs3,000 for a family of ‘2+4’ people through the Pakistan Post Foundation Logistics Division.

The USC has further planned to procure essential items within 2-3 weeks. It was directed that the USC may engage with the BISP to obtain data for the targeted assistance and again come back to the ECC for a detailed proposal for reaching out to the poor families for the effective use of the package before making any expenditure from the amount, it added.

Tax refund

The ECC also approved Rs75 billion for the FBR to enable it to pay back sales and income tax refunds, duty drawbacks and customs duties which is due for the last 10 years.

The amount shall help approximately 676,055 beneficiaries by improving their liquidity position, it added.

The ECC also reduced different taxes and duties on the import and supply of different food items.

The rate of advance tax on the import of different pulses was reduced to 0% from 2%. Individuals and associations of persons providing tea, spices, dry milk and salt to USC without a brand name will pay 1.5% withholding tax instead of 4.5%.

Individuals and AOP receiving payments from the USC for supplying ghee, sugar, pulses, and wheat flour shall be charged 1.5% withholding tax instead of 4.5% earlier.

ACD (additional customs duty) @ 2% on soya bean oil, canola oil, palm oil and sunflower oil (and on these four oil seeds) has also been exempted.

The ECC approved the supplementary grant of Rs30 billion to the Ministry of Commerce to pay back duty drawbacks to the textile exporters in the current financial year to improve their liquidity position.

The ECC was briefed about a SBP working plan on the payment of claims worth Rs49 billion out of which around 40 billion will be paid by June 2020.

The ECC approved a supplementary grant of Rs6 billion for Pakistan Railways to meet its expenses.

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