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Talks with IMF under way for $1.4 billion loan amid coronavirus crisis: Shaikh

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ISLAMABAD: Talks are underway with International Monetary Fund (IMF) to seek another $1.4 billion loan to help deal with the economic slowdown from the coronavirus.
Advisor to the Prime Minister on Finance Dr Abdul Hafeez Shaikh said this while addressing a press conference here on Wednesday.
“The $1.4 billion we are asking will be a low cost fast disbursing loan,” he said. He said $1.4 billion are separate from the current programme”, referring to the ongoing three-year IMF Extended Fund Facility (EFF) worth $6 billion. He further said the government will also be seeking more support from World Bank (WB) and Asian Development Bank (ADB).
He said Pakistan’s economy was growing stronger but the COVID-19 pandemic is expected to dent it considerably.
Shaikh said the government has announced a massive relief package amounting to Rs 1.25 trillion to support the business community and to provide relief to the poor people in wake of the outbreak of coronavirus.
He said Rs 200 billion have been allocated for the labour class, which can risk their jobs due to steps being taken to contain the pandemic. He said Rs 100 billion rupees have been earmarked to provide liquidity as tax refunds to the export industry to protect the export sector.
Regarding small and medium enterprises and agriculture sectors, he said Rs 100 billion have been reserved to facilitate farmers and small factory owners.
He said Rs 150 billion will be spent to provide financial assistance of Rs 3,000 to 12 million families across Pakistan for four months.
In order to bring down the prices of food and beverages, especially flour, ghee, sugar, and pulses, and to provide these items to the countrymen at subsidized rates, the Utility Stores Corporation of Pakistan (USC) would be offered Rs50 billion, said Dr Shaikh. He also mentioned that the government intended to buy 8.2 million tonnes’ worth of produce from the farmers, helping the money flow to them.
Regarding ensuring protection of health workers, the advisor said an additional amount of Rs 50 billion has been kept to procure protective gear and other necessary equipment in this regard.
He said National Disaster Management Authority will get Rs 25 billion to fight the pandemic. He said tax on edible items is being complete abolished or massively reduced to facilitate vulnerable segments of society.
He said that remittances are likely to fall, as is the tax collection, and a slowdown in the economic activity throughout the country is imminent.
“We have to save our own people first. If someone loses one’s job, one can be given more money than that,” he said.
“There would a reduction in the prices of fertilizers and we will also help subsidise farmers through other ways,” he said, adding that smalls businesses would be granted loans and interest rate on loans cut down.
Petroleum prices have been slashed by Rs15 a litre, the adviser said, adding that they would be kept at the same level for the next three months.
“We’re giving Rs25 billion to the NDMA [National Disaster Management Authority] and we will give them more should the need arise,” he said. “We will also set up another fund of Rs100 billion.”
Dr Shaikh noted that the SBP had cut the policy rate by 2.25% and said he wished for the Public Sector Development Program (PSDP) to continue rapidly.
“We are also going to do away with the CVT [capital value tax],” he said. “Pakistan received $350 million from the ADB [Asian Development Bank] and we will take another $900 million in June,” he added.
Separately, Adviser to the Prime Minister on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood, said there were many industries that would not shut down in just a day. “Tomorrow, it will be clear as to who needs to be set straight,” Dawood added. “There are at least 25 orders that cannot be cancelled. There was a case yesterday when rice exporters’ [delivery] trucks were stopped.” – TLTP