April 23, 2008	Wednesday	Rabi-us-Sani 16, 1429

ISLAMABAD, April 22: The Economic Coordination Committee (ECC) of the cabinet decided on Tuesday to abolish sales tax on packed food items and proposed to import more wheat to tide over the food crisis.

A source told Dawn that some ministers and officials would meet on Thursday to work out a plan for importing wheat in May and June.

He said a shortfall of one million tons in the estimated 23 million tons of wheat crop this year was worrying the coalition government.

During its last days in power, the PML-Q government had tried to avert the looming crisis and ordered an emergency import of 1.7 million tons of wheat. Of this, 1.4 million tons had already arrived, the source said.

The ECC meeting presided over by Prime Minister Yusuf Raza Gilani was informed that this year’s wheat crop would be 22 million tons. The exact shortfall, however, will be known only after the entire crop arrives in the market.

“But more wheat has to be imported keeping in view the expected shortfall of one million tons,” the source said.

The meeting also discussed a proposal to wind up the wheat committee headed by Lt-Gen (retd) Farooq Ahmad Khan. However, no decision was taken.

Sources said that the meeting expressed concerns over the shortage and mismanagement in the distribution of wheat across the country.

In order to reduce the price of packed fruit and vegetables, the ECC approved their exemption from sales tax, says a press release issued after the meeting.

The meeting also reviewed the price situation in the country and was informed that the entire world was facing an extraordinary situation because of the unprecedented rise in prices of oil and food items.

It reviewed the prices of wheat, ghee, rice, sugar and other essential food items and asked the ministries and divisions concerned to ensure their adequate supply to avert any further increase.

The ECC directed the provincial governments and Passco to expedite the wheat procurement process.

The prime minister asked the provincial governments and law-enforcement agencies to adopt measures to stop the smuggling of wheat. However, the meeting decided that there should be no restriction on inter-district movement of the grain.

The ECC decided to encourage the private sector to purchase and supply wheat to mills so that flour is available at a reasonable price.

The meeting noted that differences in prices of flour, edible oil and ghee between Utility Stores and the market had increased substantially and needed phased rationalisation.

State Bank Governor Dr Shamshad Akhtar briefed the meeting on the state of the economy. She said that foreign exchange reserves stood at $12.7 billion on April 19 and were likely to improve with the passage of time.

Finance Minister Ishaq Dar informed the meeting that inflows were in the pipeline which would augment the forex reserves.

The commerce secretary said that almost 80 per cent additional increase in total imports during the first nine months (July-March) was on account of five items -- wheat, POL products, palm oil, raw cotton and fertiliser.

The ECC also allowed the secretaries committee headed by the finance minister to monitor the supply and demand and price situation of various food items and take urgent decisions in anticipation of the ECC approval.