ECC approves Rs1.2trn package to address virus challenges

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Monday approved the fiscal stimulus package of Rs 1.2 trillion aimed at addressing the ongoing challenges that emerged due to Covid-19 outbreak.

The ECC meeting was chaired by Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh at the Cabinet Division here, said a press statement issued by the finance ministry.

According to the statement, the purpose of the meeting was to fulfill the necessary requirements for different relief measures already announced by Prime Minister Imran Khan in the wake of the pandemic.

The ECC approved a supplementary grant of Rs 100 billion for the residual/emergency relief fund in terms of Article 84(a) of the Constitution for provision of funds for mitigating the effect of Covid-19. The special package for providing relief to the poor through cash assistance under the Ehsaas Programme was also approved by the committee.

The package would provide cash grants to 12 million families under the regular “Kafalat Programme” and “Emergency Cash Assistance” on the recommendation of the district administration.

The assistance would be provided for four months and besides the Benazir Income Support Programme (BISP) beneficiaries, it would be one time dispensation. The cash would be provided either in one installment of Rs 12,000 through Kafalat partner banks i.e. Bank Alfalah and Habib Bank Limited after biometric verification or it may be provided in two installments of Rs 6,000 each.

The Poverty Alleviation Division was asked to present both options with feasibilities. The partner banks should be asked to make arrangements through branchless banking networks to disburse cash.

Rs 72.9 billion of additional funds through technical supplementary grant would be given to BISP under “Ehsaas Cash Assistance Package” in Response to Covid-19 Pandemic.

The Ministry of Industries and Production presented comprehensive proposals with regard to targeting parameters, implementation mechanism, cash assistance per family per month and financial phasing of the programme, following which the ECC approved Rs 200 billion of cash assistance for the daily wagers working in formal industrial sector and who had been laid off as a result of Covid-19 outbreak.

It was estimated that around three million workers would fall in this category and they would have to be paid a minimum wage of Rs 17,500 per month. The estimated cost of this provision for daily wagers comes around Rs 52.5 billion a month.

The provincial labour departments would ensure the delivery of assistance to the labourers, while the provision of funds should be the responsibility of the federal government.The committee directed that immediate consultation with the provincial labour departments should be carried out for providing timely assistance to those in need.

The ECC approved Rs 50 billion for the Utility Stores Corporation (USC) to provide essential food items to the vulnerable section of society at subsidised rates.The USC has prepared an initial plan to deliver nine essential food items @ Rs 3000 for a family of 2+4 people through Pakistan Post Foundation Logistics Division. The corporation has further planned to procure essential items within two to three weeks.

It was directed that the USC should engage with BISP to obtain data for targeted assistance and again come back to the ECC for a detailed proposal for reaching out to the poor families for the effective use of this package before making any expenditure from this amount.

The ECC also approved Rs 75 billion for Federal Board of Revenue (FBR) to enable it to payback the sales tax and income tax refunds, duty drawbacks and customs duties, which have been due for the last 10 years. The amount would help approximately 6,76,055 beneficiaries by improving their liquidity position.

The ECC also allowed reduction of different taxes and duties on import and supply of different food items for alleviating the adverse impact of Covid -19 on different sections of society.Rate of advance tax on the import of different pulses was reduced to 0 per cent from 2 per cent.

Individuals and associations of persons (AoPs) providing tea, spices, dry milk and salt to the USC without a brand name would pay 1.5 per cent withholding tax instead of 4.5 per cent. Individuals and AoPs receiving payments from the USC for supplying ghee, sugar, pulses, and wheat flour shall be charged 1.5 per cent withholding tax instead of 4.5 per cent.

Additional customs duty @ 2 per cent on soya bean oil, canola oil, palm oil and sunflower oil (and on these four oil seeds) had also been exempted.

The ECC approved the supplementary grant of Rs 30 billion for the Ministry of Commerce to payback duty drawbacks to textile exporters in the current financial year to improve their liquidity position when their businesses were experiencing a slow down due to worldwide outbreak of the pandemic.

The committee was briefed that the State Bank of Pakistan was working on payment of claims worth Rs 49 billion, of which around 40 billion will be paid by June 2020.

The ECC approved a supplementary grant of Rs 6 billion for Pakistan Railways to meet its expenses. The Railways has suspended its passenger train services around the country since March 19. The approved amount should be utilised for paying salaries to 70,000 employees, paying for utilities and performing disinfectant sprays on platforms and inside trains besides doing repairs for providing safe journey to the passengers.