ECC allows import of 500,000 metric tons of wheat

Cabinet body also decides to continue subsidies on five food items at utility stores

Our Correspondent July 26, 2022


The government on Tuesday approved 500,000 metric tons (MT) of wheat import at Rs103 per kilogramme – a rate cheaper than the previous tender – as it faced a challenge to allocate another Rs54 billion for food subsidies just five days after the implementation of the new budget.

The wheat import decision was taken by the Economic Coordination Committee (ECC) of the cabinet that also allowed rupee-based trade with Afghanistan for one year to take the pressure off on foreign exchange reserves. It also allowed relaxation in the import ban on goods that had already reached the country as of June 30.

The ECC approved the lowest bid offer of Cargill Int PTE /Cargill Agro Foods Pakistan at the rate of $439.4 per MT for 110,000 MT to the extent of a total 500,000 MT of wheat import, according to the Finance Ministry. The total contract price is $220 million.

The ECC asked the Food Security Ministry to explore the possibility of wheat import on three-month deferred payments due to external sector constraints. However, the private sector parties are not expected to load wheat until confirmed letters of credit for imports are opened with the banks.

Earlier, Pakistan imported 500,000MT wheat at $515.4 per MT, bringing the contract price to $258 million. The new bid is 15% less than the previous contract but the per-kg benefit will be only Rs10 due to depreciation of the Pakistani currency.

Pakistan faces a shortage of four million MT of wheat and so far it has finalised wheat contracts for one million tons. The ECC meeting was informed that a government-to-government deal with Russia was expected to be finalised this month for the import of another one million MT of wheat.

The industries ministry presented a summary for a supplementary grant of Rs53.4 billion to provide five subsidised goods at utility stores. The government had budgeted Rs17 billion for the purpose but the amount appeared sufficient to meet just one-fourth of the total needs.

“The ECC decided to continue subsidies on five essential commodities with direction to the Ministry of Industries and Production to work out feasible proposals on subsidy programmes, keeping in mind the financial implications,” according to the decision.

The demand for nearly Rs54 billion additional funds comes five days after the enforcement of the new budget, indicating that the whole budget exercise has increasingly become irrelevant due to understatement of the expenditure requirements.

Read ECC okays wheat, urea import

The Industries Ministry demanded Rs19.4 billion for providing Rs60 per-kg subsidy on wheat flour and Rs42 billion for Rs250 per-kg subsidy on edible oil. The ministry also sought Rs6.3 billion for giving Rs21 per-kg subsidy on sugar. The ECC directed the Industries Ministry to rework these financing needs keeping in mind the tight fiscal space.

The ECC approved the request of the World Food Programme (WFP) for the purchase and reservation of 120,000 MT of wheat from the imported wheat stock of the Pakistan Agricultural Storage & Services Corporation (Passco) on the latest import price.

The amount of supplied wheat along with cost and incidentals would be charged in dollars. The wheat will be ground into flour locally and supplied to Afghanistan by the WFP, subject to relaxation of ban on the export of flour to the extent of the instant proposal of 120,000 MT of wheat.

In view of the prevailing situation in Afghanistan and on humanitarian ground, the National Food Security Ministry had requested for the provision of wheat to Afghanistan through the WFP.

The ECC did not take a clear decision on the Food Security Ministry’s request to declare “National Disease Emergency” on account of emergence of lumpy skin disease in Pakistan and allocated Rs3.8 billion budget for emergency purposes.

The ECC after detailed discussion directed the ministry to prepare a cost-sharing plan after convening a meeting with the provincial secretaries concerned and the National Disaster Management Authority (NDMA), according to the decision.

The ECC was informed that the expected economic loss to the farmers because of the lumpy disease is Rs80 billion and it was feared that the disease spread rapidly across the country due to Eidul Azha. Buffalos and cows were affected by the viral disease.

The Commerce Ministry submitted a summary for permission for one-time release of the consignments of items banned on May 19, 2022, which had reached Pakistan or would reach on their payments.

Read more Utility stores in the time of inflation

In order to resolve the hardship cases, the ECC granted one-time special permission for the release of consignments stuck at the ports. The relaxation had been given only on those consignments which landed at ports or airports in Pakistan on or before June 30, 2022.

The nearly two-month old ban has proven ineffective to contain the import bill that surged to $80 billion in the last fiscal year.

In view of the hardship case of timber importers, the ECC deferred the enforcement of the requirements of import permits and plan protection measures till August 31, 2022, i.e., for the bills of lading issued till August 31, 2022.

The ECC also approved another summary of the Commerce Ministry to allow the import of goods of Afghan origin against the Pakistani rupee and without the requirement of electronic filing of import forms for a period of one year.

The requirements had been relaxed subject to the condition that Afghan exporters would provide a certificate of origin issued by Afghan customs proving that the goods had originated from Afghanistan.

The ECC approved a summary of the Information Technology Ministry seeking the constitution of an Auction Advisory Committee to oversee spectrum auction(s) for the next generation mobile services (NGMS) in Pakistan. The committee will be headed by the finance minister.

The ECC approved a supplementary grant of Rs193 billion for foreign loan repayments for the fiscal year 2021-22, ending on June 30. The foreign loan repayments requirements increased from Rs1.8 trillion to Rs2 trillion due to rupee devaluation.


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