ISLAMABAD: Projecting at least $10 billion losses to the national economy because of coronavirus pandemic, the government is considering an “economic emergency bailout package” within a week to address the likely short-to-medium term liquidity crunch to various sectors of the economy.
A series of meetings involving various federal ministries and divisions, provincial and regional governments and the international lender and donor community on Thursday showed the likely impact of unfolding global crises on Pakistan would be no less than $10-15bn according to conservative estimates.
Representatives from the Planning Commission, various ministries and provinces including Azad Jammu & Kashmir (AJK) and Gilgit-Baltistan (GB) participated in these meetings to assess the expected impact on the national and provincial economies.
Proposals for emergency bailout included a further cut to the key interest rate of the State Bank of Pakistan and instructions to the tax authorities to adopt a friendly approach to businesses instead of raids and pressure for tax recoveries. Officials also suggested utilisation of Benazir Income Support Programme (BISP)-Ehsas Funds to support families whose livelihoods were at risk due to closure of small businesses, restaurants, retail businesses, daily wagers, and factory workers, etc.
The estimates of losses and proposals would be presented to the National Security Committee (NSC) next week for a final decision on the bailout package. The final shape of the package would depend on the overall big picture to be presented to the NSC. The “Planning Commission would present this before the NSC”, said a statement issued by planning commission adding the government was “keeping a close eye on the situation and will consider providing an economic emergency bailout to address the likely short to medium-term liquidity crunch”.
For example, the ministry of commerce reported that it anticipated a $2-4bn loss to exports depending on how the prolonged the crisis becomes and its effect on demand in global markets. A similar impact could also hit remittances from overseas Pakistanis because of lockdowns and reduced work opportunities in major economies where Pakistanis go to work and send money back.
It was also reported that the federal board of revenue could alone suffer about Rs300bn losses as a major port, business and commercial activities in the southern port city of Karachi were grinding to a halt. Moreover, the livelihood of a large population was also at risk.
It was also reported that a large section of the rural economy was dependent on wheat harvest and sugarcane production and the activity they generate from April to June.
The representatives from Azad Kashmir and Gilgit Baltistan said the livelihoods of their populations were mostly dependent on tourism and transportation which have also come to a halt.
An official statement said a special inter-ministerial and inter-provincial meeting on the impact of COVID-19 and way forward concluded that the government was “set to intervene to safeguard the national economy from adverse impacts of Corona pandemic”.
The statement quoted the Deputy Chairman Planning Commission Jahanzeb Khan as saying that there no food shortage was expected due to Corona, as sufficient stocks were available to meet the immediate needs.
A representative from the Commerce ministry reported that due to the closure of major port operations and retailers globally, reduced global demand was likely to lead to a reduced global economic growth. Officials from the Ministry of Maritime Affairs said that efforts were being made to ensure uninterrupted port operations for the continued supply of essential commodities.
Officials from the Ministry of National Food Security informed that Pakistan will not face any food shortage as Pakistan has sufficient stocks of essential items to meet the immediate needs.
Member Social Sector of the planning commission Dr Shabnum Sarfraz highlighted the need to augment the human resources at the forefront of fighting the epidemic and urged the health ministry to engage the medical and nursing students to add to the capacity of the current health staff.
Besides the existing commitments of more than $600 million from UN agencies, the World Bank and Asian development bank and Japan, DFID of UK also promised to extend financial help to support livelihood.