PM unveils Rs1.13tr stimulus package
Fuel tariff cut by Rs15, utility bills to be paid in instalments; labourers to get Rs3,000 per month
Prime Minister Imran Khan on Tuesday announced a Rs1.13 trillion fiscal stimulus to protect people and the economy from the adverse impact of coronavirus, as the State Bank of Pakistan (SBP) cut interest rate by a further 1.5%.
Imran announced the fiscal stimulus package during an interaction with anchorpersons in the federal capital, focusing on the government’s immediate measures to deal with the coronavirus crisis in the country.
At least half of the amount announced on Tuesday is either the routine expenses or the people’s money that is withheld by the government. Of the remaining fiscal stimulus, at least 50% expenditures will be incurred outside the budget.
So, less than one-fourth of the Rs1.13 trillion package will be borne by the government. The government has made Rs280 billion allocation for wheat procurement a part of the stimulus, which is routine annual exercise where provinces take loans from banks to procure wheat from farmers.
Also, in an emergency meeting on Tuesday, the SBP decided to cut interest rate by a further 1.5% to 11%, withdrawing from its earlier stance. The central bank was earlier reluctant to cut the interest rates by more than 0.75%.
At his interaction with the anchorpersons, the prime minister struggled to defend his position on the lockdown. At one point, he claimed that the country was in a lockdown situation since the time National Security Committee met (on March 13th).
“Chaos is more dangerous than coronavirus if we take any decision in haste it will have dire impact on the society,” Imran said, while announcing the 12-point fiscal stimulus.
He announced to give Rs100 billion refunds to exporters that the Federal Board of Revenue (FBR) has withheld to inflate its revenues. This money already belongs to the industrialists.
The prime minister also announced Rs280 billion relief to farmers on account of wheat procurements.
As a matter of fact, the Economic Coordination Committee (ECC) of the cabinet approved the 8.2 million metric tons wheat procurement target for this season much before the spread of the coronavirus.
The prime minister also said that Rs25 billion will be given to the National Disaster Management Authority (NDMA) and Rs50 billion will be spent on the procurement of equipment for medical staff.
Similarly, the government has set aside Rs100 billion for emergency purposes, which would not be given to businesses and people to offset the impact of coronavirus.
“The idea is to make people aware that Rs1.13 trillion is available for them at crisis time”, said Omar Hamid Khan, special secretary to ministry of finance when he was asked to comment why the government made routine expenditures part of the fiscal stimulus. He added that in times of need more money will also be provided.
The prime minister announced Rs200 billion financial assistance for labourers but did not explain the mechanism for its disbursement. He said that the government would hold talks with the business community and the provinces to provide the relief.
The Rs100 billion relief will be given to small and medium enterprises and agriculture sector. Imran said that the government had decided to defer the principal and interest payments by these sectors.
One of the biggest measures was Rs150 billion relief to the poorest – giving them Rs3,000 per month for next four months.
In a tweet, Special Assistant to Prime Minister Dr Sania Nishtar said that 10 million families would be provided with cash assistance. She said that each family will get Rs12,000 over a period of four months. Half of them will be new additions to the Benazir Income Support Programme (BISP) that the government now calls Ehsaas programme.
The prime minister said that Rs50 billion additional funds would be provided to the Utility Stores Corporation (USC) to provide essential items at affordable rates. He also announced a Rs15 per litre immediate cut in the prices of petroleum products, saying it would cost the government Rs75 billion.
In a further relief to the people, Imran announced payment of electricity bills in instalments by consumers, who use less than 300 units a month and gas consumers having monthly bill of up to Rs2,000.
The government has also decided to reduce or waive taxes on import of pulses, Imran said.
While responding to a question on a delay in responding to the crisis, the prime minister said that the option of lockdown was first discussed after the NSC meeting.
“I opposed the complete lockdown which is a curfew,” he said, adding that a complete shutdown will disrupt the supply of food items and medical equipment.
“Curfew is the last stage of lockdown… I am so much concerned about the downtrodden segment of society as to how would they make ends meet during curfew,” he said.
“However, if situation worsens, then we will have no option but to impose curfew but with comprehensive strategy,” he added. “We will form a team of volunteers to distribute food items to the poor if curfew was imposed.”
Imran emphaised that he would have imposed a curfew immediately had the situation in Pakistan gone as bad as in Italy or the rest of the Europe. “But in Pakistan it is not feasible, considering the number of poor in the country,” he explained.
Pakistan has a majority of young population that’s why the situation here is different from Italy, he maintained.
He also refuted the impression that the government was unprepared for the crisis, saying that the government had been reviewing the situation since January.
“Pakistan does not have a strong economy like the countries in the West, Prime Minister Imran says. “The impact of a curfew in Pakistan on the economy will be immense.”
Responding to another question about the performance of his economic team, Imran said that he was responsible because the economic decisions are taken with his prior consent.
NDMA Chairman Lt Gen Muhammad Afzal said that Pakistan had to procure 10,000 ventilators as part of his plan to cope with the coronavirus crisis in the country. Currently, the country only has a little over 2,000 ventilators – only half of which would be available for use in the current situation.
“Unfortunately, nothing is available anywhere except China”, he said, adding that Chinese authorities had directed their businesses to sell to Pakistan as a “preferred buyer”.
Meanwhile, the Board of National Disaster Risk Management Fund (NDRMF) has approved grant financing of $50 million for immediate response to COVID-19.
The grant will be used to effectively respond to minimise the impact of COVID-19 through provision of medical products, including but not limited to testing kits, viral RNA extraction kits, mobile X-ray machines, clinical ICU ventilators, syringe pumps, N 95 masks, thermal guns and scanners.
Out of the approved $50 million, $20 million has already been transferred into the federal treasury/National Disaster Risk Management Fund. For implementation of the project the NDMA will work in close coordination with the health ministry.