Karachi plan not granted approval yet: Issuance of PKR-linked bonds to IFC approved by ECC

ISLAMABAD: A meeting of the Economic Coordination Committee (ECC) of the Cabinet has approved issuance of offshore Pak rupee (PKR)-linked bonds to the International Finance Corporation (IFC) as well as mobile device manufacturing and electric vehicle (EV) policy.

The ECC meeting presided over by the Minister for Finance and Revenue, Dr Abdul Hafeez Shaikh, on Wednesday, was informed that issuance of bonds to the IFC would help in availability of financing to priority sectors, and promote private-sector investments.

It would also bring foreign exchange liquidity in domestic foreign exchange market in the post-Covid-19 scenario, the minister was further informed.

However, the meeting postponed yet again approval of the Karachi Transformation Plan (KTP).

The ECC also approved Mobile Device Manufacturing and Electric Vehicles Policy (02-03 wheelers and HCDs) presented by the Ministry of Industries and Production.

After due deliberations, the forum approved removal of withholding tax of four percent on manufacturing to retailers of locally-manufactured phones to incentivize the sector.

Moreover, removal of sales tax on locally-manufactured phones was also approved in principle and modalities would be worked out in consultation with the Finance Division.

The finance secretary briefed the forum about rationalization of subsidies (phase-I) as a detailed presentation was given by Special Assistant to Prime Minister on Revenue focusing on electricity, food and National Savings during the first phase.

The finance minister directed to present a comprehensive summary with concrete proposals suggesting a way forward before the ECC.

The meeting also discussed priority berthing for wheat and sugar imports, and the Minister for Maritime Affairs updated the forum about the latest position of wheat vessels and operations of Karachi Port Trust (KPT) and Port Qasim Authority (PQA). The meeting directed that the logistic committee of the ECC would be chaired by the Minister for Maritime Affairs to work out the SOPs, ensuring all stakeholders, including private sector, are onboard with reference to priority berthing.

The Ministry of National Food Security and Research presented a summary on provision of additional quantities of wheat to the Government of AJ&K and the Utility Stores Corporation.

The meeting instructed to provide first load of the additional quantities to both the AJ&K and the USC on priority as an interim arrangement to ensure smooth supply of wheat across the country.

The detailed proposal would be discussed in the next ECC meeting.

The ECC also approved the new re-lending policy 2020 presented by the Economic Affairs Division envisaging changes in the borrowing cost of the government, take into account variation in the exchange rate, and pass on actual rates to the borrower for transparency.

Other terms and stipulations, including those with respect to recovery of commitment fee as in the policy in vogue, will continue to apply.

The ECC also approved technical grants; (a) Rs219.300 million for the operationalization of the newly-established Isolation Hospital and Infections Treatment Centre, Islamabad; (b) Rs305.462 million to payoff Pakistan’s annual contribution to World Health Organization (WHO); (c) Rs106.775 million to the ICT Administration for various projects; (d) Rs706.82 million for FATA, temporary displaced persons, Emergency Recovery Project, NADRA; (e) Rs278.091 million for Annual Contribution of Pakistan to UNFA, PPD and IPPF-FPAP for FY-2018-19, 2019-20, and 2020-21 and; (f) Rs53.10 million for procurement of medical equipment, machinery and medicines to combat Covid-19.

The ECC meeting was attended by Minister for Interior Sheikh Rashid Ahmed, Minister for Industries and Production Hammad Azhar, Minister for Economic Affairs Khusro Bakhtiar, Adviser to the Prime Minister on Commerce Abdul Razak Dawood, Adviser to the Prime Minister on Institutional Reforms and Austerity Ishrat Hussain, SAPM on Revenue Dr Waqar Masood, SAPM on Petroleum Nadeem Babar, Federal Minister for Maritime Affairs Ali Haider Zaidi, SAPM on Poverty Alleviation and Social Safety Dr Sania Nishtar, SAPM on Energy Tabish Gauhar, Federal Minister for Privatization Muhammad Mian Soomro, and Federal Minister for Energy Omar Ayub Khan.

Governor State Bank of Pakistan Dr Reza Baqir joined the meeting through a video link.

Copyright Business Recorder, 2020