ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet has directed Secretaries of Finance and National Food Security and Research (NFS&R) on the issue of bank charges on wheat procurement, that provincial governments should meet these charges from their own fiscal space, sources close to Secretary Finance told Business Recorder.
On April 28, 2023, Ministry of National Food Security and Research briefed the ECC that public sector, comprising PASSCO and provincial governments, procures local wheat in order to stabilise wheat prices and to ensure fair returns to farmers during the post-harvest period.
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Punjab and Sindh were considered as wheat producing zones with share at 76 percent and 15 percent in national wheat production, respectively. Share of Khyber Pakhtunkhwa and Balochistan was five percent and four percent, respectively.
Government of Sindh had devised a plan to procure 1.40 MMT of local wheat at Rs4,000/40 Kg. Cash Credit Limit (CCL) of Rs214 billion had been requested. This amount constitutes Rs140 billion for purchase of wheat, while remaining amount Rs74.00 billion would be utilised on banks borrowing charges. Incidental charges to retain wheat crop for 2023-24 had been estimated at Rs917.6/40 Kg. However, incidental charges would be borne from their own budgetary provisions.
Government of Punjab had approved procurement of 3.50 MMT of wheat at procurement price of Rs3900/40 Kg. In this connection the CCL of Rs950 billion was submitted. This amount constitutes of Rs343.35 billion for purchase of local wheat, whereas remaining Rs505.65 billion would be utilised on account of banks borrowing charges and cushion amount. Government of Balochistan had approved wheat procurement target of 0.10 MMT with the grant of interest free loans for the purchase of requisite quantity of local wheat at procurement price of Rs3900/40 Kg, no CCL had been requested.
Ministry of NFS&R recommended following proposals of Governments of Sindh, Balochistan and Punjab: (i) Government of Sindh may be assigned wheat procurement target of 1.400 MMT at procurement price of Rs4,000/40 Kg with tentative CCL limit for Rs214.00 billion; (ii) Government of Punjab may be assigned wheat procurement target of 3.500 MMT at procurement price of Rs3,900/40 Kg with tentative Cash Credit Limit (CM) for Rs950 billion; (iii) Government of Balochistan may be assigned wheat procurement target of 0.100 MMT at procurement price of Rs3,900/40 Kg with the grant of interest free loans, already approved by their Provincial Cabinet; and (iv) incidental charges would be borne by the respective Provincial Government.
Copyright Business Recorder, 2023
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