Packages only on evidence-based parameters, says govt

ISLAMABAD: After obtaining detailed briefing about impact of COVID-19 on manufacturing especially on textile sector, the government has made it clear that any further incentive package would depend upon evidence based defined parameters keeping in view limited resource envelop.

The textile and garments sector table long wish list before the Finance Ministry arguing that they required second round of incentive package in the coming budget to avoid layoffs. However, the government made it clear that it could not provide dole out packages to a few sectors only as the assistance would be provided keeping in view their contribution to GDP. The textile sector had historically always been vying for financial packages keeping in view its influence on policymaking. However, the government is of the view that any further package would be proportionate to their contribution to the economy.

According to official press release issued by Ministry of Finance on Wednesday stating that a delegation of Nishat Group met Adviser to PM on Finance and Revenue to apprise him about the damage done by COVID-19 related economic downturn to large scale manufacturers. Adviser on Commerce and Minister for Industries were also present in the meeting apart from Dr Ishrat Husain. Finance Secretary and FBR Chairperson also participated in the meeting.

It was shared by the delegation that owing to COVID-19 induced demand compression, size of balance sheets of large manufacturers is not maintainable. The major contributory factor is massive labour cost especially in labour intensive industries like garments sector. Any arrangements of avoiding permanent laying off or furloughs are putting excessive strains on the liquidity position of businesses, which are anticipating slow economic recovery, hence hedging against potential solvency issues.

Delegation head stressed on enhanced role by the government to ease liquidity position of large businesses. The need for crafting scheme for cost sharing between public and private sectors was stressed. Adviser on Finance empathised with the participants and updated them about the current status of implementation of PM stimulus package worth Rs1,240 billion. The delegation was asked to put up precise case for financial facilitation and its parameters as SBP has already been running a scheme for payroll protection.

Adviser on Commerce desired for working out impact of reversion of orders by US, from China to other countries, and its potential impact on manufacturers in Pakistan. Minister for Industries requested the delegation to provide details of proposal in terms of cost sharing arrangements along with details about requirements of different sectors so that government could ensure balanced treatment to all key contributors to GDP.

Adviser on Finance concluded the meeting with the understanding that specific proposal be crafted regarding upscaling of existing scheme of SBP as too many interventions carry the risk of diluting the impact. He further emphasised that upper bounds of additional liability be calculated through defined parameters so that evidence-based decision may be shaped before next budget.