ECC approves Rs19.5b supplementary budget

Grants sanctioned to meet excess expenditures, pick cost of bleeding enterprises

ISLAMABAD: The federal government on Wednesday approved Rs19.5 billion worth of supplementary budget to meet its excess expenditures and pick the cost of bleeding enterprises including Pakistan International Airlines (PIA) that was given an additional Rs3.2 billion to remain afloat.

With the Rs3.2-billion injection into the cash-starved PIA, the total financial assistance for the loss-making air carrier from the budget increased to Rs27.7 billion in the current fiscal year. The Pakistan Tehreek-e-Insaf (PTI) government has failed to turn around the airline during its first two years of rule.

It has already decided to lay off over 9,300 employees of Pakistan Steel Mills, which has remained closed for the past five years.

Headed by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh, the Economic Coordination Committee (ECC) of the cabinet also approved the handover of Pakistan Machine Tools Factory (PMTF) to the armed forces. It decided to pick liabilities of the factory amounting to Rs1.8 billion.

The ECC also approved to pick Rs30.8 billion worth of loans of the Earthquake Reconstruction and Rehabilitation Authority (Erra) as legal status of the entity hanged in the balance and it was still operating despite the decision to shut it down.

The ECC approved a technical supplementary grant of “Rs3.2 billion for PIACL to discharge obligations on account of mark-up against government of Pakistan-guaranteed loans”, said a statement issued by the Ministry of Finance.

For the outgoing fiscal year, the government had allocated Rs24.5 billion for the payment of mark-up on guaranteed loans but the actual demand rose due to drastic changes in interest rates, according to a summary prepared by the Aviation Division. The Pakistan Tehreek-e-Insaf (PTI) government had boasted that before the Covid-19 hit the economy, it was adhering to fiscal discipline and did not issue regular supplementary grants. However, budget documents revealed that it issued Rs336 billion worth of regular supplementary grants.

The total supplementary budget, including technical grants, amounted to Rs544.8 billion, higher by Rs322.7 billion or 145% over the previous year, according to the budget books. A grant of Rs235 million was given to the deputy commissioner Islamabad for payment of internal security duty allowance to the troops of Pakistan Rangers (Punjab) deployed in Islamabad.

An amount of Rs500 million was approved for the Ministry of Information and Broadcasting for meeting expenditures of the media campaign about Covid-19, Rs100 million for the National Disaster Management Authority (NDMA) for procuring equipment for locust control in Punjab and nearly Rs8 billion for the NDMA on account of procurement of emergency equipment through Pakistan’s foreign mission in China.

An amount of Rs4.5 billion was approved as additional budget for the capacity building of civil armed forces, Rs80 million for the Competition Commission of Pakistan for different expenses, Rs100 million for the purchase of kerosene oil by the headquarters of Frontier Corps KP (North) and Rs1.5 billion for the Ministry of Federal Education and Professional Training for the award of scholarships to Afghan students.

The finance ministry said the ECC also granted approval for book value adjustment of overdue loans amounting to Rs30.8 billion for Erra over and above its allocated development and non-development budget.

It also allowed, on the recommendation of a committee earlier constituted by the ECC, the conversion of two re-lent Chinese loans into government loans, keeping in view the subsuming of Erra into NDMA and Erra being a non-profit/ non-revenue generating entity. The ECC approved the “handing over of Pakistan Machine Tools Factory to the Strategic Plans Division (SPD)”.

For the purpose of operationalisation of PMTF, Rs500 million will be provided to SPD as a loan. The federal government will pay all the liabilities accrued till the transfer of PMTF management control to SPD, after partial settlement of liabilities of Rs1.78 billion. The ECC approved a “risk-sharing facility for the SBP Refinance Scheme to support employment and prevent layoff of workers”.

The scheme supports the provision of credit at a concessional rate to businesses that commit not to lay off workers till Sept 2020. The loss coverage for the SME sector had been increased to 60% from the existing 40% to promote greater takeup at the smaller level of business, said the finance ministry. Under the new changes, borrowers having turnover up to Rs800 million can avail benefit of the scheme. Earlier, for eligibility of scheme, turnover limit was up to Rs2 billion. 

Published in The Express Tribune, June 18^th, 2020.

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