• Rs200bn allocated for labour force
• Rs150bn earmarked to support vulnerable families
• Stipend for poor families increased from Rs2,000 to Rs3,000 per month
• Prices of petroleum products reduced by Rs15 per litre across the board
ISLAMABAD: Prime Minister Imran Khan on Tuesday announced a rescue and stimulus package worth about Rs1.13 trillion aimed at supporting various sectors of society and the economy in absorbing the adverse impacts of coronavirus pandemic.
Speaking at a news conference, the prime minister gave details of the multi-sectoral package put together by the federal government and said the provinces had also been asked to chip in with their funds to support troubled sections of economy.
At the same time, he said the State Bank of Pakistan (SBP) was considering reducing its key policy rate. It was cut by 150 basis points to 11 per cent soon after the premier’s televised session came to an end.
Giving details of the stimulus package, Mr Khan said the government had decided to allocate Rs200 billion for the labour force and was talking to the provincial governments to make available their resources. He did not give details, but said discussions with businesspeople were in progress over how to use some of the funds so that they do not send their workforce on leave.
To protect the export sector from global challenges, the prime minister announced Rs100bn payment of refunds immediately to improve cash flows for payments to labour force. Secondly, he said the SBP had been asked to engage with banking industry for deferred payment of principal and interests on bank loans.
Another Rs100bn was approved for deferred payment of loans for small and medium enterprises (SMEs) and agriculture and concessional loans to ensure their input costs do not go up.
Also, Rs150bn was earmarked to support vulnerable families by increasing their stipend from Rs2,000 to Rs3,000 per month for four months. The prime minister said the provinces had also been asked to come up with their support plans so that the weak segments of society could be further helped out. He said the network of panagahs (shelter homes) for the jobless and poor was being expanded so that the unemployed and weak could have meal and shelter.
Likewise, Mr Khan said the Utility Stores Corporation would be given additional Rs50bn to ensure it did not run out of essential commodities and keep providing them at affordable rates to the middle class.
The prime minister also announced Rs15 per litre reduction in the prices of petrol, diesel and kerosene with immediate effect, saying this relief worked out to Rs75bn. Responding to an observation that reduction in oil prices did not commensurate with the price cut in the international market, PM’s special assistant Nadeem Babar said the impact of global prices usually had a lag of about 45 days and if the trend continued prices would be brought further down.
Mr Khan announced that payment of electricity and gas bills would be allowed in three installments. The facility would be limited to those with monthly electricity consumption of less than 300 units and less than Rs2,000 per month of gas bills. He said the facility covered about 75pc of power consumers and 81pc of gas consumers.
The prime minister said Rs50bn had been set aside to provide financial support to medical staff and to hire more staff. In addition, he said the Federal Board of Revenue had been directed to completely exempt or reduce taxes on imported essential food items like pulses.
An additional amount of Rs25bn would be given to the National Disaster Management Authority to beef up medical and rescue equipment like testing kits and ventilators.
In addition, Mr Khan said about Rs100bn would be set aside for a fund aimed to make arrangements for future emergencies. He said a separate stimulus package for construction industry would be announced in a couple of days.
This would be an “unprecedented package” because the construction industry not only would create job opportunities but also carry a host of industry along and boost economy.
Responding to a question about one of the highest interest rates in the world, the prime minister said there had been continuous discussions on the matter but there were also its repercussions and hence there was no straightforward answer to rate cut which could be discussed in public. However, he said everything was moving in the right direction and exports had started to pick up before the coronavirus challenge emerged.
“We don’t want a chaos in the market,” he said. Mr Khan said it was wrong to suggest he was not in the picture in key economic decisions which were being taken with consensus and in a responsible manner. He said not only his economic team but he himself was continuously getting policy advice from independent experts.
His economic adviser Dr Abdul Hafeez Shaikh said the key objective of the package was to overcome the challenge caused by coronavirus, make health and food facilities available to the people and address cash problems of the people and the businesses despite limited resources.
He said the critics should keep in mind that out of Rs4tr resources, the federal government had only Rs1.6tr at its disposal after transferring provincial shares to take care of Rs5tr loans in two years. Therefore, the key issue was that the resources have to be mobilised which was not an easy job given falling exports, increasing current account deficit and an artificially controlled exchange rate inherited by the current government about 18-19 months ago.
Published in Dawn, March 25th, 2020