The Federal Government has started different packages to provide relief to the vulnerable sector of the country that has been undergoing a noticeable financial crisis these days due to Covid-19. Monday was a blessed day for the businesses as the Economic Coordination Committee (ECC) approved a package of over Rs.50 billion for small and medium enterprises (SMEs) along with granting permission to negotiate with eleven countries to hold repayment of $ 1.8bn debt for a year. Dr. Abdul Hafeez Sheikh presided over the said meeting in which an additional funding of Rs.3.02bn was also approved to fence the Pakistan-Iran border that had been demanded by the Ministry of Defence.
Talking to the reporters after the meeting Hammad Azhar (Minister for Industries and Production) told that that Rs.50.69bn would be utilized to furnish the SMEs with indirect cash flow support in the form of pre-paid electricity. Adding further he told that the bills for the months of May, June and July of last year would be taken as a “base” and would be financed by the Government whenever these business start their operational activities. The facility would remain valid for six months w.e.f May-June 2020. Briefing about the procedure of the said financing.
A package of Rs. 50bn has been approved for SMEs in the form of prepaid electricity bills
Hammad disclosed that the amounts would be directly credited to the consumer accounts of around 3.2m commercial and 350,000 to 400,000 small industrial connections. For three months, the commercial consumers would avail the support up to Rs. 100,000 while the Industrial consumers up to Rs. 450,000 under the said scheme. For meters whose data of electricity consumption would not be available for the months of May-July 2019, the benefit would be given on average basis.
An amount of Rs.2.5bn was also approved for Azad Kashmir and Gilgit Baltistan under the said scheme and the ECC directed the Ministry of Industries and Production to introduce same relief packages for other sectors like agriculture, transport and microfinance. Hammad Azhar shared that the Government was also planning to introduce a loan package for small businesses without any security or collateral the process of collecting applications in this regards would start shortly.
Govt to start negotiations with the G-20 for debt relief and suspension of debts repayments for one year
Moreover the committee gave permission to the Ministry of Economic Affairs to contact the G20 countries for debt relief that had been announced for the poor countries affected by the Covid-19. It also authorized the ministry to negotiate with the 11 creditors to suspend the debt payable for one year. It was also decided that ECC would finally approve the agreements with the bilateral creditors (G-20). The proposed suspended loan (Principal plus interest) would be built into the remaining repayment schedule. Pakistan owes 11 countries out of G-20 an amount of $ 20.7bn under 155 loans. The 11 creditors include Saudi Arabia ($ 625m), China ($ 615m), Japan ($ 578m), France ($ 281m), US ($ 193m), Germany ($ 148m), Korea ($ 73m), Canada ($ 34.5m), Russia ($ 21m), Italy ($ 9m) and UK ($ 1.32m).
Moreover the Economic Coordination Committee (ECC) also approved a credit loss subsidy of Rs. 30bn for SBP Refinance scheme so as to provide support to employment and prevent layoff of workers.