ISLAMABAD: Ministry of National Food Security and Research (M/s NFS&R) has sought ECC approval for Cash Credit Limit (CCL) of Rs.540 billion for Punjab and Rs214 billion for Sindh for the quarter July-September 2023, official sources told Business Recorder.
The ECC headed by caretaker Finance Minister Dr Shamshad Akhtar will consider the proposal of Ministry of National Food Security and Research on Thursday (today).
Sharing the details, sources said, Finance Division allows Cash Credit Limits on quarterly basis to PASSCO, TCP and Food departments of governments of Punjab and Sindh for procurement of wheat, sugar, rice, cotton, and to maintain reasonable stock of commodities as per requirement/ assigned targets.
The ECC of the Cabinet, in its decision of April 28, 2023 while considering the summary moved by M/o National Food Security & Research for fixation of wheat procurement targets for the provincial governments, approved the Cash Credit Limits for Government of Punjab and Sindh to the extent of current procurement of wheat only and further directed Secretaries Ministry of National Food Security & Research and Finance Division to hold meeting with provinces on the issue of payment of bank charges and submit viable recommendations thereon to the ECC for consideration .
Current procurement required CCL of Rs.343.35 billion for Punjab and Rs.140 billion for Sindh. Finance Division had already allowed Cash Credit Limits for the quarter April-June 2023 for Punjab (Rs.950 billion) and Sindh (Rs.2 14 billion) prior to the decision of the ECC of April 28, 2023 keeping in view of the urgent requirement of CCL for smooth wheat procurement operation.
In pursuance of the ECC decision, Finance Secretary chaired a meeting on July 11, 2023 in Finance Division with M/o NFSR and Finance Departments and food departments of provincial governments to discuss the viable plan for settlement of their commodity debts.
During the meeting, it was noted that government of Punjab has already taken steps for settlement of commodity debt while government of Sindh is likely to seek approval of its cabinet for debt settlement plan.
It was decided that the finance department & food departments of Punjab and Sindh shall provide debt retirement plans including the CCL requirements and a summary shall be submitted for the approval of the ECC of the Cabinet about the quantum of CCLs to be issued to Food Department Punjab and Sindh.
Accordingly, finance/ food departments of Punjab shared the Proposed Debt Retirement Plan in wake of CCL requirement for commodity financing for wheat for the quarter July-September 2023.
The CCL requirement of Punjab for the quarter July-September has been reduced to the tune of Rs.540 billion from Rs.950 billion for April-June 2023. However, the unsecured exposure of Rs.143 billion is still included in the CCL requirement for July-September 2023.
As regards the CCL for Sindh, no debt retirement plan has been shared so far. However, provincial cabinet of Sindh approved the Debt Retirement Plan in its meeting held on October 31, 2023. Food department Sindh has requested CCL for July-September 2023 of Rs.214 billion including the unsecured exposure of debt Rs. 108.35 billion.
Keeping in view the provinces requirements, the following recommendations have been proposed by the Ministry of National Food Security and Research: (i) Cash Credit Limit of Rs.540 billion for Punjab and Cash Credit Limit of Rs.214 billion for Sindh may be approved for the quarter July-September 2023.
Further, Punjab and Sindh may be advised to settle the unsecured exposure of commodity debt; (ii) in future, Finance Division may monitor the CCL requirement of Punjab and Sindh with the view that Provinces have been taking steps for settlement of their unsecured exposure and that CCL may be issued to the extent of unsecured exposure as reported on September 30, 2023; and (iii) CCL of April-June 2023 of Punjab and Sindh, already issued by Finance Division may be endorsed.
Copyright Business Recorder, 2023