ECC okays Rs147b supplementary budget

Approves more wheat procurement, PMO renovation, honorariums despite economic pressures

ISLAMABAD:

The government, on Tuesday, approved a supplementary budget worth Rs147 billion to meet various obligations, including Rs363 million for renovating the Prime Minister’s office and paying honorariums to another department.

The Economic Coordination Committee (ECC) of the Cabinet, which made these decisions, also increased the federal government’s wheat procurement quota by another 400,000 metric tonnes and allowed the import of 200,000 metric tonnes of urea for the upcoming Kharif season.

Headed by Finance Minister Muhammad Aurangzeb, the ECC’s decisions carry financial implications of Rs188 billion.

This includes Rs147 billion in supplementary grants and an additional Rs41.5 billion approved in the form of bank loans to procure an additional 400,000 metric tonnes of wheat by the Pakistan Agriculture Storage and Services Corporation (PASSCO).

The cabinet committee approved two summaries to provide funds to fulfil promises made by two Prime Ministers – Shehbaz Sharif in August last year and Anwaarul Haq Kakar in October. These premiers had made announcements without budgetary cover, and the funds are now diverted from the Benazir Income Support Programme (BISP) and the development budget to honour their commitments.

Pakistan is currently facing difficult economic conditions, but the government heads seem indifferent to that fact.

The ECC approved Rs200 million to provide honorariums to employees of the Karachi Shipyard and Engineering Corporation, a commitment made by PM Sharif during the launching ceremony of Navy Ship Tariq in August last year.

Previously, the current prime minister and finance minister approved four salaries in honorariums for employees of the PM’s Office.

An official from the Ministry of Defence Production stated that the Rs200 million were provided by cutting the ministry’s development budget by the same amount, thus having no additional financial implication. However, this decision once again suggests that the government of PM Sharif is not acknowledging the tough economic conditions of Pakistan.

The ECC approved a budget of Rs162.5 million for renovating the PM’s Office, according to finance ministry officials.

Additionally, the ECC diverted Rs6.9 billion from the development budget of various ministries to clear Rs5.9 billion in pending liabilities of the erstwhile Earthquake Reconstruction and Rehabilitation Authority (ERRA). Although the cabinet approved winding up ERRA, it has failed to implement the decision.

The ECC also approved a Rs3.2 billion supplementary grant as rupee cover for a World Bank-funded project.

Furthermore, the ECC approved diverting Rs160 million from the BISP to pay Rs20,000 per day to daily wagers working at Chaman border. Former prime minister Kakar announced this financial support during a meeting of the Provincial Apex Committee on National Action Plan convened in Quetta in October last year.

The ECC approved increasing the wheat procurement quota of PASSCO by 400,000 metric tonnes to 1.8 million tonnes.

Correspondingly, it also allowed borrowing Rs41.5 billion to buy the commodity from farmers at Rs3900 per 40kg rate.

Punjab-based farmers are suffering due to the wrong decisions of the caretaker government to allow importing 3.5 million tonnes of wheat despite domestic surpluses. The premier has extended the PASSCO quota to partially offset the negative impact faced by Punjab-based farmers. Punjab produces 75% of the total wheat.

The ECC allowed the import of 200,000 metric tonnes of urea to cover the shortfall, estimated to be between 250,000 to 657,000 tonnes for the Kharif season of agriculture. If the government continues supplies to the two Sui Northern Gas Pipelines Limited (SNGPL)-based fertiliser plants, the shortfall is estimated at 250,000 metric tonnes.

The ECC was informed that the import would cost the country up to $62 million. The government has kept both the options of government-to-government and floating tender for the same quantity to be imported from abroad open.

The ECC deferred a decision to extend subsidised gas supplies to the two fertiliser plants for another six months, which involves Rs23 billion either in subsidy or additional burden on domestic consumers.

The ECC approved a budget of Rs623 million for the idle 3100 employees of the closed Pakistan Steel Mills. The mill has been closed since June 2015, and the Pakistan Muslim League-Nawaz (PML-N) government has not included it in the active privatisation list.

Additionally, the ECC approved a Rs2.2 billion supplementary budget for the temporary displaced persons project, funded by the World Bank. It also approved a Rs959 million budget for National Accountability Bureau (NAB) to pay its 25% share in recoveries made in the past.

The government approved Rs70 billion in subsidies for consumers of K-Electric (KE) to offset the impact of the huge circular debt. The ECC was informed that payable to power producers had reached Rs1.8 trillion as of the end of January, which is alarming, and independent power producers (IPPs) are pressing hard to maintain their debt repayments and fuel supply chain.

For the current fiscal year, the government has allocated Rs127 billion to pay subsidies to KE.

The finance ministry suggested that KE should only be paid Rs30 billion due to a dispute over Rs40 billion claims.

However, the ECC approved Rs40 billion as an advance subsidy.

The ECC also approved Rs55 billion in subsidies for consumers of Azad Jammu and Kashmir, despite objections by the AJK government, which first wants settlement of other disputes.

The AJK government is demanding the signing of a Bilateral Agreement for the Neelum Jhelum Hydro Power Project, retrospective payment of Water Use Charges amounting to Rs7.7 billion, and payment of Sales Tax on generation worth Rs349.3 billion.

The ECC approved a Rs4.9 billion supplementary grant for the Pakistan Atomic Energy Commission for the purpose of paying salaries and employee retirement benefits. It also approved a Rs2.5 billion supplementary budget for the Electricity Distribution and Efficiency Improvement project.

Published in The Express Tribune, May 8^th, 2024.

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