To support the people of Pakistan and the industry and the businesses facing the losses being suffered during the lockdown imposed to fight the COVID-19 pandemic, the government of Pakistan (GOP) has provided a major financial relief to the people, the industry and the businesses. In this context, the KPMG has published a report on May 14 citing the Ministry of Finance as a source.
On March 29, the State Bank of Pakistan decided that Banks and DFIs will defer the payment of principal loans and advances for one year. The regulatory limit on the extension of credit to small and medium industries (SMEs) has been permanently increased from Rs125 million to Rs180 million. On 30 March, the supplemental grant of Rs30 billion was announced for the Ministry of Commerce to pay back duty drawbacks to textile exporters in the current financial year to improve their liquidity position.
On 3 April, the GOP announced a special incentive package for the construction industry. An amnesty has been proposed and no questions will be asked about the source of investment made till 30 June 2022. On 4 April, the Securities and Exchange Commission of Pakistan (SECP) allowed all lending Non-Bank Finance Companies (NBFCs) including Non-Bank Microfinance Companies (NBMFCs) to defer repayment of principal loans by their borrowers for one year, under the present circumstances.
To boost its resources to continue to provide the relief to the people to fight the coronavirus, and to shore up foreign exchange reserves and budgetary support for fighting the adverse impact of the pandemic, the GOP has arranged about $4 billion additional financial assistance from multilateral lending and aid agencies
To provide relief to the poor people, and those, who have lost their jobs due to the lockdown imposed in the country, on 30 March, the GOP had approved the fiscal stimulus package of Rs. 1.2 trillion and Supplementary Grant of Rs100 billion for the “Residual/Emergency Relief Fund” for mitigating the effect of the virus for the impacted population. While Rs200 billion of cash assistance was reserved for the daily wagers laid off by the formal industrial sector, Rs50 billion was allotted to the Utility Stores Corporation to provide essential food items to the vulnerable section of the society at subsidized rates.
Moreover, on 6 April the Power Division reportedly prepared power tariff freezing for three months aimed at minimising financial burden on the coronavirus-hit consumers, the estimated financial impact of which will be Rs 381 billion. On 10 April 2020, the Economic Coordination Committee (ECC) of the Cabinet has approved the deferment of monthly and quarterly fuel adjustments in the electricity bills for power consumers for the next three months (till June 2020) under the government relief package.
Also, for the most vulnerable people of society, the GOP has distributed Rs12,000 every month to each poor family as part of its Ehsass programme that will help the people to purchase food items. Further, the provincial governments have distributed rations to the poor people along with coordinating the efforts of local NGOs to distribute rations to the needy.
Apart from the above mentioned measures, the GOP has decided to pay electricity bills of 3.5 million small businesses for three months. With Ehsass programme running on the sides, this is another magnanimous step by the GOP in providing relief to the public. The traders who have been patiently bearing losses in times of this pandemic have welcomed this imitative of the government.
To boost its resources to continue to provide the relief to the people to fight the coronavirus, and to shore up foreign exchange reserves and budgetary support for fighting the adverse impact of the pandemic, the GOP has arranged about $4 billion additional financial assistance from multilateral lending and aid agencies, including additional $1.4 billion from the International Monetary Fund (IMF). In this regard, Prime Minister’s appeal to the multilateral lending institutes to support the developing countries to fight the COVID-19 was widely hailed at the world level.
Also, on 1 April 2020, the federal cabinet approved launching a domestic Sukuk bond for generating Rs700 billion for financing the escalating budget deficit and meeting the increasing financial requirements. The rich people are also making major contributions to the Prime Minister’s Relief Fund, meant to fight the COVID-19 pandemic.
The above discussion indicates that the GOP’s decision to provide the above stated huge relief to the people and the industry/businesses, and its fruitful efforts to muster the required financial support from the multilateral institutions will help the people and Pakistan’s economy a lot in facing the financial crunch due to the lockdown imposed to observe the social distancing, the only way to fight the coronavirus.
Moreover, these bold and timely measures speak of the sincerity with which the GOP, led by Prime Minister Imran Khan, is interested to serve the needs of the people of Pakistan during difficult times. And, Prime Minister’s successful campaign to muster additional funds as a budgetary support from the international financial institutions shows his dedication and relentless hard work to uplift Pakistan’s economy in these testing times. Hence, these efforts of the GOP need recognition and appreciation of the people of Pakistan at all levels.
The writer is a former Consultant and Research Fellow of Islamabad Policy Research Institute (IPRI), and Senior Research Fellow of Strategic Vision Institute (SVI), Islamabad