The government on Tuesday approved immediate disbursement of Rs25,000 each to 4.125 million families affected by the recent rains and floods, involving an additional fiscal impact of Rs103 billion, and ordered 1.6m tonnes of wheat imports to meet higher needs arising from the natural disaster.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Minister for Finance Miftah Ismail. The meeting also authorised the signing of agreements with a couple of G-20 countries under the Covid-19 debt relief initiative for the poor nations, announced in April 2020.
The Ministry of Poverty Alleviation and Social Safety submitted a summary for emergency cash assistance to families affected by flash floods in 2022. The meeting was told that under the prime minister’s directives, the Benazir Income Support Programme (BISP) had already disbursed about Rs30bn to more than 1.13m families at the rate of Rs25,000 out of its own budgetary allocation for the current fiscal year, which was to be reimbursed by the Ministry of Finance.
However, the number of affected people had increased and the National Disaster Management Authority (NDMA) and BISP had identified 4.125m beneficiaries on the basis of revised criteria approved by the prime minister to a scorecard of 32. The monetary impact at this stage was estimated at Rs103.12bn. However, the number of affected families could go higher in view of the evolving situation following unprecedented rains and flash floods across the country that caused loss of lives and properties and assessments were in progress.
The ECC approved the summary and directed BISP to disburse Rs25,000 per household in calamity-affected districts for a poverty score of up to 32. It was also decided that the finance ministry should hold consultations with the BISP on the overall financial implications based on the allocated budget of the BISP and timelines for releases to the BISP given the emergency situation and what should be the modalities based on the revenue collection stream. The meeting also decided that the federal government will “ask the provinces to provide their share of the relief for flood-affected populations”.
WHEAT IMPORT: The ECC also revived the requirement for strategic wheat stocks to 2m tonnes from its earlier reduced target of 1m tonnes and resultantly ordered additional wheat imports of 1.6m tonnes. The Trading Corporation of Pakistan (TCP) was directed to arrange a further quantity of 0.8m tonnes through government-to-government (G2G) or open tender. According to an official statement, the private sector is permitted to import 0.8m tonnes of wheat with the proviso that no subsidies are provided for such imports of wheat.
The Ministry of National Food, Security and Research (MNFSR), which sought the re-fixing of national wheat strategic reserves to the level of 2m tonnes, reported that a ministerial committee on July 15 had decided to reduce the strategic stock level from 2m tonnes to 1m tonnes and total imports were contained to 1.6m tonnes instead of an earlier decision of 3m tonne imports taken on May 9, 2022.
The TCP has already booked 986,000 tonnes of wheat through international tenders, and a G2G offer from Russia was declined due to the higher offered price. It was explained that after commitments and distribution of 10.1m tonnes of wheat to all stakeholders, there would be a carryforward stock of about 996,000 tonnes, which was insufficient in the wake of recent rains and flood damage and resultant financial issues of farmers for the next wheat sowing, increasing local prices on top of hoarding and smuggling issues.
Therefore, the MNFSR advocated that in order to ensure wheat availability across the border and to stabilise local wheat prices, it was necessary that the quantum of wheat strategic reserves be retained at the level of 2m tonnes.
Therefore, the ECC approved the revision of its earlier decision for the import of 3m tonnes of milling wheat and allowed for the maintenance of strategic reserves of wheat at a level of 2m tonnes, including a quantity of 80,000 tonnes on account of the Saarc food bank.
GRANT FOR FATF: The Ministry of Economic Affairs (MEA) presented a summary of the G-20 Debt Service Suspension Initiative (DSSI). This debt relief, termed DSSI-I, for IDA-eligible countries to mitigate the socio-economic impact of Covid-19 was announced in April 2020. Currently, a further six agreements for DSSI-III with Italy, Japan and Spain have been negotiated and finalised. The ECC authorised the MEA to sign the agreed rescheduling of the agreements.
The ECC also approved a Rs7m technical supplementary grant to host a 15-member delegation of the Financial Action Task Force and Asia-Pacific Group (FATF/APG). The National FATF Coordination Committee on AML/CFT had sought the grant for expenditure related to the on-site visit of a FATF/APG assessors’ team to verify the stance of Pakistan as reported in cyclic reports before formally exiting the country from the so-called grey list after four years.
EXTENSION SOUGHT FOR NHA PLAN: The Ministry of Communication submitted a summary for an extension of time to complete the business plan of the National Highway Authority (NHA) from June 30 to Sept 30, 2022. It was reported that the NHA has already shared information with an Asian Development Bank-sponsored consultant, John Standingford, in preparation for its business plan. However, additional time was required to complete the work. The ECC allowed the extension with the condition that no further extensions would be given. In case a further extension is sought, the Finance Division will start deducting interest from the NHA on Cash Development Loans.