Exports may go down by up to $2.672b during March-June period

ISLAMABAD: The commerce ministry has sensitized Prime Minister Imran Khan that Pakistan’s exports will be adversely affected on account of impact of deadly wave of COVID-19 across the world and during the period of March-June 2019-20, exports may go down by up to $2.672 billion. The prime minister was informed that exports could either tumble by 25pc ($1.336 billion) at the minimum and by 50 percent (2.672 billion) at the maximum.

Prime Minister Imran Khan, while agreeing to recommendations of commerce ministry, has constituted a cabinet sub-committee to develop economic emergency reforms and bailout package for export industry. "The prime minister went through the presentation prepared by the commerce ministry here on Monday about the ongoing developments taking place across the world, which are detrimental to Pakistan’s exports. The prime minister was told that US, EU, UAE markets and port operations are shutting down and, so much so, major retailers are closing stores worldwide and under this scenario, Pakistani exporters are being told not to ship consignments till further notice," says a senior official who was part of the meeting chaired by the prime minister held on the impact of coronavirus on exports.

The world economic growth forecast is projected to lower from 4.9pc to 2.9pc, even 1.5pc, whereas China’s GDP growth is projected to decline from 6.1pc to 4.8pc. The Afghanistan border has been sealed by Pakistan and all trade fairs and exhibitions stand cancelled. And SME global revenues expected to shrink by 30pc to at least 50pc of the last fiscal year. The PM was told that delayed consignments for the next three months would delay payments by at least six months. Export revenues are likely to fall and inventories of Pakistani exporters will go up. The delayed payments will lead to cash flow crunch for businesses. The cash flow situation may force the business community to close down their units that may result in joblessness, triggering surge in unemployment.

The official said that the prime minister was also told that there was a need to take policy decisions under which weekly labor holidays should be increased from 1 to 2 per week to improve the cash flow of exporters. The prime minister was requested to decrease the interest rate and reduce the liquidity ratio of banks, increase credit availability for exporters. The premier was also suggested to provide relief to exporters by deferred payments on export finance.

He was also suggested to go for suspension of EOBI and social security payments and suspension of mark-up on bank loans for one year. The prime minister was also recommended to extend the ERF tenure to one year and take industry back to zero rated for one year. The PM constituted the sub-committee to look into the recommendations of the commerce ministry, but the top official said that financial managers of Finance Ministry may not provide the relief to exports as they are more inclined to toe the line of IMF.