Pakistan to borrow more for virus war
ISLAMABAD: Pakistan announced on Wednesday that it will approach multilateral international creditors, including the International Monetary Fund (IMF), the World Bank (WB) and the Asian Development Bank (ADB) to obtain loans of $ 3.65 billion (Rs587 thousand million) to avoid the negative impacts of COVID-19 viruses on the country’s economy.
The adviser to the Prime Minister of Finance, Dr. Abdul Hafeez Shaikh, announced that Pakistan’s discussion with the IMF is underway to obtain additional seed funding of $ 1.4 billion under the existing Expanded Fund (EFF) on an accelerated basis. Pakistan had reached a $ 6 billion deal with the IMF in less than 39 EFF months, so this additional funding of $ 1.4 billion would be associated with the ongoing funding service.
“Efforts to mobilize our funds have been geared as the World Bank will provide $ 1 billion, while ADB will provide $ 350 million now and another $ 900 million loan for June 2020,” said the Prime Minister’s adviser on Finance and Revenue, Dr. Abdul Hafeez Shaikh, addressing a press conference here on Wednesday. Special Assistant to the Prime Minister for Information and Broadcasting Firdous Ashiq Awan. The Special Assistant to the Prime Minister for Textiles, Revenue Abdul Razak Dawood and the Minister for Economic Affairs were also present on the occasion.
Accompanied by the entire economic team on this occasion, the adviser to the Prime Minister of Finance, Dr. Shaikh, said that the terms and conditions of the IMF program would remain the same to obtain additional funds. He said Pakistan is not receiving additional $ 50 billion in funds announced by the IMF, but they were arguing for additional funds under the existing EFF facility. He said the IMF was already allowing expenses incurred to combat the COVID-19 virus not to become part of the budget deficit.
Federal Minister for Economic Affairs Hammad Azhar said on the occasion that there would be additional $ 600 million in funds from both the World Bank and the Asian Development Bank, while the remaining amounts were committed, but the projects moved slowly, so that these resources were diverted towards the emergency relief of the fight against this Virus. “In the next stage, we will also try to convince donors to convert the suspended program loans to budget assistance for the provision of aid related to the COVID-19 virus,” he said.
The special assistant to the oil prime minister, Nadeem Babar, said on the occasion that the government was considering putting in a new price formula for POL products and was going to discuss it with the oil trading companies (MAC) in a period of two weeks. Considering volatility in the international market, he said, the government was making changes to the pricing formula to present a weekly or biweekly pricing announcement. He said that the installation of the electricity and gas bills would be carried out for three months in such a way that it would be staggered in nine months. Surcharges for late payments, he said, would not be recovered from consumers.
In another consultation on the mechanism of disbursement of Rs 3,000 monthly stipends among vulnerable segments of society, Dr. Abdul Hafeez Shaikh said the government would provide Rs 3,000 monthly assistance compensation to weak segments, but in case of job loss, this monthly assistance could be increased When asked about the budget deficit target, the Secretary of Finance replied that the IMF had already agreed that spending incurred in the fight against COVID-19 would not be part of the deficit target budgetary. He said there were strict budget controls to control the deficit.
The adviser to the Prime Minister of Finance said that the government made a historic fiscal stimulus of 1.25 trillion rupees and also mentioned that the monetary stimulus would also be given as the SBP cut 225 basis points and set it at 11 percent . He said that the Capital Value Tax (CVT) would be abolished. He said that efforts were being made to accelerate the use of development funds under the Public Sector Development Program (PSDP).
He said that POL prices were reduced by Rs15 per liter and a further price reduction would be made. In another consultation, he said that the government allocated Rs100 billion for industrialists and exporters, since it would be used to defer the principle and the margin of the loans, but it would also provide a cushion to address its other problems derived from the crown situation.
He said that media advertising quotas have also been included in PM’s aid package and in this regard the roadmap in this regard would be developed in consultation with media owners and all interested parties. .