The government has decided to lift inter-provincial ban on wheat movement that may further increase prices besides increas-ing chances of smuggling. PHOTO: REUTERS
ISLAMABAD: The government on Wednesday allowed duty-free import of wheat besides banning its export as the federal and provincial departments could procure 80% of the target set for the staple commodity amid soaring prices.
The Economic Coordination Committee (ECC) of the cabinet took these decisions and also approved Rs29 billion in supplementary budgets for various departments just three weeks before the close of financial year, suggesting a lack of fiscal control.
This has negated the finance ministry’s claim of not approving additional supplementary budget during the course of the fiscal year. A significant amount of Rs29 billion is additional spending, unlike the technical supplementary grants given in the past. Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh chaired the ECC meeting.
“The ECC has allowed import of wheat by the private sector for an unlimited period after waiving different taxes and duties,” stated a finance ministry statement.
The ECC also gave directives for removing restrictions on the movement of wheat and flour within the country and banned exports till further recommendations.
The ECC was briefed that so far Pakistan Agricultural Storage and Services Corporation (Passco) and provincial food departments had procured 6.5 million tons of wheat or 80% of the target of 8.25 million tons.
Passco and the Khyber-Pakhtunkhwa (K-P) government would continue procurement till the end of June, the ECC was informed.
However, farmers are not providing wheat at the official rate of Rs1,375 per 40 kg and prices have soared above Rs1,800 in Punjab due to high demand.
The government has decided to lift the inter-provincial ban on wheat movement that may further increase prices besides increasing chances of smuggling.
Despite a crisis-like situation in January, the federal and provincial governments have not learnt lessons.
On the recommendation of the Ministry of National Food Security and Research, the ECC directed that the provincial food departments of K-P and Balochistan should achieve their procurement targets as early as possible and law enforcement agencies of the provinces should be sensitive about hoarding and keeping a vigilant check on hike in prices of flour and wheat, according to the finance ministry statement.
The ECC after reviewing the situation of urea availability in the country and for making available for the upcoming sowing season, the ECC also formed a committee to review and recommend the appropriate Variable Contribution Margin.
The ECC approved Electric Vehicle policy for 2-3 wheelers. The policy was proposed by the Ministry of Industries after consultation with various stakeholders from Engineering Development Board, Ministry of Science and Technology, Ministry of Climate Change, Ministry of science and Technology and others.
In order to pay the risk allowance, equal to one pay to all healthcare workers performing duties related to Covid-19 in the federal government, the ECC approved an amount of Rs480.556 million to meet the requirements. The amount will be provided out of the Rs50-billion prime minister’s fiscal stimulus package through technical supplementary grant. The amount shall be paid to 3,432 employees of 10 health institutions of the federal government. The situation will be reviewed after four months for the continuity of the allowance.
In order to provide relief to small and medium enterprises during the ongoing pandemic situation, ECC approved the change in key terms of the Kamyab Jawan Programme. Now, instead of two tiers (Rs100,000 to Rs0.5 million and Rs0.5 million to Rs5 million) there will be three tiers of the loans; Rs100,000 to Rs1 million, Rs1 million to Rs10 million, Rs10 million to Rs25 million. Tier 1 loans shall be on the personal guarantee of the borrower whereas tier-2 and tier-3 loans shall be as per bank’s own credit policy.
The government shall bear credit losses for principal portion only on the disbursed portfolios of the banks for T1 up to 50%, T2 up to20%, T3 up to 10% and the executing agencies shall be all commercial banks. Loan pricing was also changed for all three tiers (3%, 4%, 5% respectively, bank pricing shall be KIBOR+400 BPS for all three tiers).
The ECC also approved $10.9 million for capital increase in Bangladesh operations of National Bank of Pakistan and for meeting the minimum capital requirements prescribed by the central bank of Bangladesh for the year 2019 and to create some cushion in equity for 2020. The proposal was submitted by the Finance Division. The NBP’s Bangladesh operation is running into losses after Rs18-billion scam.
The ECC approved Rs29 billion supplementary budgets for various departments. It approved Rs3.5 billion for Ministry of Foreign Affairs for meeting the costs of the running of the foreign missions. An amount of Rs54.7 million was approved for Ministry of Law & Justice to pay the annual membership fee of different organisations - a subsidy for the lawyers.
The Rs250 million was approved for the National Accountability Bureau (NAB) to meet its liabilities towards government of Punjab. An amount of Rs7.3 billion for Ministry of National Health services, Regulations & Coordination for expanded program on immunisation. The Rs5 billion was approved for the Pakistan Poverty Alleviation Fund. Another amount of Rs8.4 billion was given to BISP and Rs3.4 billion was approved for Establishment Division to pay arrears of group Insurance of non-gazetted employees.
Published in The Express Tribune, June 11th, 2020.
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