Finance ministry declines funds for Covid jabs
Advises health ministry to get $393m loan for coronavirus vaccines
The Ministry of Finance has declined to provide $393 million to the health ministry from the budget to procure Covid-19 vaccines, advising it to arrange foreign loans in order to avoid pressure on exchange rate and also ensure transparency in deals.
The finance ministry’s refusal came 10 days before the Asian Development Bank (ADB) is set to approve a $500 million loan for procurement of Covid-19 vaccines. The ADB board is going to approve a $500 million loan for procurement of vaccines on August 6 under APVAX facility.
The health ministry has sought the budget as an additional supplementary grant since the government has not allocated adequate funds in the recently approved budget for vaccine procurement.
During a meeting of a special committee on procurement of vaccines, the additional secretary finance informed the participants that the foreign exchange reserves situation is not very comfortable and the concerned agencies should arrange for loans, a participant of the meeting told The Express Tribune.
Headed by the National Coordination Committee (NCC) on Covid-19 Chairman Asad Umar, the committee met last week to review the overall situation.
“Since significant funds are available with the World Bank, the ADB and the Asian Infrastructure Investment Bank for this purpose, it would be a desirable option to use such facilities,” said Secretary Finance Yousaf Khan while commenting on the development.
The finance ministry has already provided nearly $450m for vaccine procurements for the months of June and July from the budget. The response of the secretary health was awaited till the filing of the report.
Although the gross foreign exchange reserves held by the State Bank of Pakistan (SBP) stand at over $18 billion, these are largely built by taking foreign loans. In recent days the rupee has already come under pressure and is trading over Rs161 to a dollar.
Sources said in one of the Economic Coordination Committee (ECC) meetings, the SBP Governor Dr Reza Baqir had also urged the federal government to provide the schedule for vaccine procurements in advance in order to avoid pressure on the rupee value.
The National Disaster Management Authority (NDMA) – the agency responsible for procurement of the vaccines – is reluctant to secure foreign loans, which require more disclosure including the price of vaccine to the lender, said the sources in the Ministry of Finance.
The NDMA is of the view that the Chinese suppliers of the Covid-19 vacancies have signed the Non-Disclosure Agreements (NDAs) that bar it to disclose the price to a lender. However, this excuse seems untenable, as the Philippines have secured an ADB loan for vaccine procurements from China.
The sources said the NDMA has been insisting that the supplementary grants should be directly provided into its accounts, which the Ministry of Finance is reluctantly doing due to lack of transparency.
In the last fiscal year, the Ministry of Finance had given Rs25.3 billion to the NDMA for vaccine procurement but the actual spending remained at Rs16.6 billion.
The health ministry has moved a summary for the approval of the cabinet for a $393 million or Rs63.5 billion supplementary budget to procure vaccines for the months of August and September.
Unlike the practice of routing summaries related to supplementary funds through the ECC, the health ministry has started sending the summaries directly to the cabinet that results in lesser scrutiny of the additional demands.
The summary for a $250 million supplementary grant for vaccines procurement for the month of July did not go to the ECC for approval and landed directly in the cabinet. A senior cabinet official said the ECC route was avoided due to an emergency situation.
Read more: Govt plans door-to-door vaccination
Overall, the NDMA has sought $1.1 billion for vaccine procurements till December 2021 for achieving the vaccination target (minimum 45 million and maximum 65 million). Pakistan has so far administered 25.4 million doses.
The government had planned to procure 146.2 million doses to provide shots to 69.6 million eligible people or 70% of the population that can be vaccinated, said the Ministry of National Health Services.
As per the health ministry, only 99.5 million of the population is eligible for the Covid-19 vaccination. About 58% of the population, mainly children less than 19 years of age and pregnant women, are not eligible for the Covid jabs.
The World Bank and the ADB have offered loans to low and middle income countries to procure vaccines. The WB has recently restructured its worth $153 million Covid-19 related loan. Process for procuring 13 million doses of Pfizer vaccines is already underway against the $153 million WB loan.
The Islamic Development Bank has also committed to provide $70 million for procurement of vaccines but no final approval has yet been secured. Pakistan can avail up to $1.2 billion loans from the ADB for vaccine procurements, including $500 million at concessionary interest rate of 2%.