ECC approves Rs534bn relief package

Updated March 31, 2020

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Finance ministry regrets some ministries and divisions have failed to submit their summaries. — APP/File
Finance ministry regrets some ministries and divisions have failed to submit their summaries. — APP/File

ISLAMABAD: A special meeting of the Economic Coordination Committee (ECC) of the cabinet on Monday struggled to put in place mechanisms for disbursement of various elements of the federal government’s Rs534 billion relief package announced for mitigating the impact of the coronavirus outbreak on the country’s poor people and economy.

Informed sources said that the ECC meeting, presided over by Adviser to the Prime Minister on Finance & Revenue Dr Abdul Hafeez Shaikh, approved in principle summaries that could be put up by ministries involving a total amount of about Rs534bn.

Dr Shaikh and some other members of the cabinet pointed out certain limitations of the proposed summaries and ordered their further fine-tuning and clarity for consideration of the federal cabinet’s meeting to be held on Tuesday.

A statement issued after the ECC meeting said the “ECC approved the fiscal stimulus package of Rs1.2 trillion” but gave break-up of only six ‘main components’ with cumulative amount of Rs583bn, including Rs49bn arrangement by the State Bank of Pakistan. Even these amounts included adjustment of various fiscal heads already approved in the budget.

Finance ministry regrets some ministries and divisions have failed to submit their summaries

Total additional supplementary grants worth Rs336bn were approved by the ECC. This included Rs100bn for relief fund, Rs200bn for the labour class, Rs30bn for the Ministry of Commerce and Rs6bn for Pakistan Railways.

Finance ministry spokesman Omar Hameed Khan, when approached, confirmed that some ministries and divisions could not be able to submit their summaries to the ECC for approval, for example power and petroleum divisions. He said the overall size of the stimulus package was Rs1.2tr as approved on the summary of the finance division.

The finance ministry said the purpose of the special meeting of the ECC “was to fulfil necessary requirements for different relief measures already announced by the prime minister”.

An official statement said that the ECC approved the supplementary grant of Rs100bn for the “Residual/Emergency Relief Fund” in terms of Article 84(a) of the Constitution for provision of funds to mitigate the impact of Covid-19 on the country’s economy.

The special package for providing relief to the poor through cash assistance under the Ehsaas Programme was also approved by the ECC. The package will provide cash grants to 12 million families under the regular ‘Kafalat Programme’ and the Emergency Cash Assistance on the recommendations of district administrations.

The ECC also approved Rs200bn of cash assistance for daily wagers working in the formal industrial sector and for those who had been laid off as a result of lockdowns due to the Covid-19 outbreak. Those working in the informal sector and small businesses would remain uncovered under this scheme.

The Ministry of Industries and Production explained proposals regarding targeting parameters, implementation mechanism, cash assistance per family per month and financial phasing of the programme through the provincial and district administrations concerned where these formal businesses are registered. It was estimated that around three million workers will fall under this category and they will have to be paid a minimum wage of Rs17,500 per month. The estimated cost of this provision for daily wagers comes to around Rs52.5bn a month.

Immediate consultation

The provincial labour departments will ensure delivery of assistance to labourers while provision of funds will be the responsibility of the federal government. The ECC directed that immediate consultation with the provincial labour departments mentioned under the provincial rules of business be carried out for providing timely assistance to those who were in need.

The ECC approved Rs50bn for Utility Stores Corporation (USC) to provide essential food items to vulnerable sections of society at subsidised rates. The USC has prepared an initial plan to deliver nine essential food items at Rs3,000 for a family of two to four people through the Pakistan Post Foundation Logistics Division.

The ECC directed the USC to engage with the Benazir Income Support Programme to obtain data for targeted assistance and again come back to the ECC for a detailed proposal for reaching out to poor families for effective use of this package before making any expenditure from this amount.

The ECC also approved Rs75bn for the Federal Board of Revenue to payback sales tax and income tax refunds, duty drawbacks and customs duties which have been due for the last 10 years. The amount will help approximately 676,055 benefi­ciaries by improving their liquidity position.

Published in Dawn, March 31st, 2020