ISLAMABAD: Prime Minister Imran Khan will today (Tuesday) chair a federal cabinet meeting to introduce Rs15 billion package for providing relief to consumers from inflation.
The cabinet will consider diverting Rs15 billion from the Ehsaas Programme allocation towards providing subsidies to consumers. The relief will be provided through the Utility Stores Corporation (USC) by diverting Rs15 billion.
The direct subsidies might utilise Rs40 to 50 billion through direct and indirect intervention going to be approved by the cabinet today. The government has also revived the Special Focus Group on essential food items under the jurisdiction of the Ministry of National Food Security & Research with the mandate to develop the Management Information System (MIS) in order to plan and coordinate demand and supply of 15 to 20 essential food items.
The prime minister has revived the Special Focus Group to ensure foolproof supply of food items. Thereare reports that some flour mills owned by close political allies of the government were allegedly found involved in smuggling of flour in guise of Maida and Suji.
The government had allocated Rs191 billion for the Ehsas Programme but so far the utilization stands at Rs50 to 60 billion.
The government possessed cushion to divert these resources for providing relief to consumers against the price hike as CPI-based inflation touched new heights and stood at 14.6 percent for January 2020. Now the economic ministries as well as State Bank of Pakistan are projecting that the inflation would start receding and might come below 13 percent from February 2020.
“The PM might also direct law enforcing agencies to crack down on the hoarders of wheat and sugar stocks,” said the official sources adding that the Monetary and Fiscal Coordination Board would also meet soon to focus on taking steps taming inflationary pressures through the coordinated efforts.
Meanwhile, Prime Minister Imran Khan Monday denied reports about removal of his Adviser on Finance Dr. Abdul Hafeez Sheikh and SBP Governor Reza Baqir.
The prime minister made it clear during a meeting of the government spokespersons he presided over here to review the latest political and economic situation and how to more effectively combat the opposition’s propaganda.
It was learnt that the prime minister emphasised that there was no truth absolutely in media reports that the adviser on Finance and SBP governor were being removed.
He also reiterated his resolve and commitment not to spare those behind the recent flour wheat crisis and the increase in price of sugar in the country in recent days.
The prime minister has already ordered investigation into the flour-whet crisis and factors behind surge in sugar prices. He also announced to go to any extent to provide relief to the common man.
It was decided that the prices of flour, ghee, pulses, rice and others edibles will be subsidized and the district administration would ensure implementation of the relief package. It was also decided to provide subsidised flour to 50,000 registered tandoors.
In tweets on Sunday, the prime minister said the cabinet meeting on Tuesday would decide about measures with regards to giving relief to the masses in relation to essential commodities.
Meanwhile, the Ministry of Finance in an official statement issued Monday said the economic policies and economic reforms programme of the government being implemented with the support of IMF were based on sound and well-established principles of good economic management.
“The objective of these policies is stabilization in the first phase, followed by rapid, sustainable and inclusive growth,” says the Finance Division in response to certain news reports insinuating that the “IMF policies [are] leading to destruction of economy”.
The Finance Division has maintained that the government’s policies have already started showing positive results.
There is significant improvement in economic indicators. The external sector has stabilized and the fiscal deficit has declined significantly in the first six months of the financial year.
Low tax-to-GDP ratio is amongst the fundamental problems of Pakistan’s economy. Unless this is corrected, the country cannot achieve prosperity. Therefore, a multi-pronged revenue mobilization strategy is being pursued to broaden the tax base and raise tax revenues in a balanced and equitable manner.
To cushion the low-income groups from any adverse effects of stabilization measures, the government has allocated sufficient resources for income support and social protection programs and has increased spending on health and education.
Furthermore, targeted energy subsidies have been given to the vulnerable group, the statement concluded.
Meanwhile, the Economic Coordination Committee (ECC) of the Cabinet Monday rejected a summary for allowing the import of 0.3 million tons of sugar keeping in view sufficient stocks of sweetener available on the domestic market.
However, the ECC slapped a ban on the export of 350,000 tons of sugar to avoid shortages. The sugar industry is largely owned by influential politicians irrespective of political divide in the country and the question arises when sufficient stocks exists, then how the prices rose from Rs55 per kg to Rs85 per kg in the domestic market.
Top official sources said that an increase in gas prices was again not on the part of the agenda. The sources said that PM Imran Khan will be chairing the meeting of the federal cabinet on Tuesday (today) where he will take the decision to hike the prices of gas or postpone it for time being keeping in view the rising inflationary pressures. The ECC also did not consider the prices of power sector fixation mechanism in Monday’s meeting.
The ECC witnessed a heated debate among different ministries for more than one hour but it was told during the meeting that the landed cost of sugar would be standing at Rs62 per kg after taking heavy toll of Rs14 billion in the shape of taxes by abolishing all taxes, including the Regulatory Duty at 40 percent, GST at the rate of 17 percent and 7 percent Withholding Tax and Customs Duty. The commodity prices in the international market are witnessing a surge, so it was assessed that the price of sugar might go up and touch Rs79 per kg in coming weeks and months.
The total consumption of sweetener stood at 5.7 million tons, including 480,000 tons on monthly basis. The ECC was told that there were stocks of 2 million tons, so sufficient stocks could meet domestic requirements, including for upcoming Ramadan.
Now the question arises that the sugarcane price fixed by the provinces increased from Rs180 to Rs190 per 40 kg but the prices of sugar had already crossed from Rs55 per kg to Rs85 per kg. Who has earned lofty profits among the sugar barons that exist in all mainstream political parties?
With the increased GST on sugar from 8 to 17 percent, it caused a hike in the prices by over Rs5 per kg, so the prices should have increased from Rs55 to 60 per kg. But the prices skyrocketed and touched in the range of Rs80 to 85 per kg in retail market.
The ECC was given a briefing by the Ministry of Industries and Production on the current situation of sugar supply in the country. It was told that adequate stocks of sugar are available in the country but prices in both domestic and international market are showing an upward trend. In order to maintain the prices in the domestic market, the ECC banned the export of sugar.
The ECC further directed that in case there is considerable decrease in available stocks, the ECC would be willing to reconsider the proposal for import of sugar as well as removal of tariff and taxes on subject import. The members of the ECC were all convinced that there are adequate stocks of sugar available in the country and there is currently no compelling reason to import the commodity in the country. The ECC was told that there are 1.719 million tons of sugar stocks available with the mills. The ECC also directed the ministry to talk to the provincial governments to control price of commodity in the country as it is a provincial subject.
The ECC also approved the request by the Ministry of Law and Justice for a technical supplementary grant of US$1 million equivalent to Pak rupees as legal and miscellaneous expenses in the case of Reko-Diq. The ECC also directed the ministry to give a detailed briefing on the details of the case in the next meeting. An official statement issued by the Finance Ministry on Monday stated that Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh chaired the meeting of the Economic Coordination Committee of the Cabinet this afternoon.
The ECC considered and approved the Technical Supplementary Grant for release of funds amounting to Rs3,300 million during FY 2019-20 in respect of the project tilted “Prime Minister’s Special Package to implement Skill for All strategy as catalyst for TVET sector development in Pakistan.”
The ECC also approved the continuation of funding facility to the ISGS. It was decided that the loan agreement between the ISGS and GHPL be approved for a period of one year. Any extension thereafter be subject to progress on the undertaken projects and as soon as the first project reaches closure, the ISGS needs to become financially self-sustaining and after closure of the project it will also put forward a business plan on returning the loan.