ISLAMABAD, Dec 9: The Economic Coordination Committee (ECC) of the cabinet on Thursday approved additional import of 500,000 tons of wheat, allowed export of 1.7 million bales of cotton while banning export of all varieties of fertilizer with immediate effect.

Prime Minister Shaukat Aziz, who presided over the ECC meeting, gave green light to the import of 500,000 tons of wheat, in addition to one million tons allowed earlier, to replenish stocks and improve supplies.

Economic Adviser to the Finance Ministry Dr Ashfaq Hasan told reporters after the meeting that the process of import of one million tons of wheat would complete by the end of this month and fresh tenders for the additional quantity would be floated by the Trading Corporation of Pakistan (TCP) soon.

He said the ECC noted with concern the slow lifting of wheat by the NWFP and Balochistan from the Karachi port and directed them to immediately lift 131,000 tons of imported wheat. The Railway and National Logistics Cell authorities were also asked to provide additional transportation facilities to the two provinces in this regard.

He said the ECC also restricted export of all fertilizer types, including DAP, to any country except the United Nations agencies because domestic demand for agriculture inputs had increased.

He said the fertilizer supply situation was comfortable and the government had already imported 230,000 tons of Urea to meet the rising local demand. He said the imported wheat was also sold at Rs450 per bag although the landed cost of imported urea was about 1250-1300 per bag.

He said the government had provided substantial subsidy for the import of urea but was unable to say how much. The ECC noted that timely intervention of the TCP for the purchase of 1.7 million bales of cotton from farmers was a very positive step that did not allow cotton prices to drop.

He said the TCP had been asked to export the 1.7 million bales of cotton it had contracted from farmers, although he acknowledged that international prices of the commodity were at present depressed.

Dr Ashfaq said that provinces appreciated the TCP intervention and noted with satisfaction that this increased the farmers' income by Rs30 billion in one year. Asked as to how this additional income was worked out, he said it was all guesswork.

He said the final estimates of cotton production were not available but 10.1 million bales had so far reached ginneries and a good amount of the commodity was still at the farm level.

The ECC constituted a cabinet committee on agriculture for better coordination among stakeholders and implementation of government policies. The prime minister will head the committee and all chief ministers, federal and provincial agriculture ministers, SBP governor and Zarai Taraqiati Bank chairman will be its members.

The ECC also reduced sales tax on domestic air tickets from 20 per cent to 15 per cent to partially offset the impact of oil prices. Fifteen per cent sales tax is already charged on international air tickets of all airlines and domestic tickets of PIA. The move would have a nominal impact on revenues, the adviser said.

Dr Ashfaq, who is also head of the debt coordination committee, said that in view of foreign exchange inflows in December and January, the foreign exchange reserves would remain at a comfortable level and the exchange rate would witness stability.

He said heavens were not going to fall as a result of an all-time high trade deficit of $2.5 billion as reported by the press because trade to GDP ratio had not increased. In fact, he said, it was a positive development.

He said the increase in trade deficit was because of an investment-driven demand in machinery and raw material and capital goods, showing signs of accelerating economic activity.