• Relaxes import ban on luxury goods that landed on or before June 30
• Stops short of declaring emergency on lumpy skin disease

ISLAMABAD: In less than a week after the approval of the federal budget 2022-23, the government on Tuesday approved Rs193 billion worth of supplementary grants and relaxed the ban on non-essential and luxury items imposed three weeks ago to curb the import bill amid falling foreign exchange reserves.

These decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Dr Miftah Ismail. The meeting stopped short of declaring a “National Disease Emergency” as lumpy skin disease spread in the country with a possible economic loss of over Rs80bn besides international ramifications. The meeting agreed in principle to continue the subsidy scheme for five essential items and wheat flour but did not formally approve its cost estimates going beyond Rs70bn.

The meeting was told by the Ministry of Economic Affairs (MEA) that an amount of $11.278bn equivalent to Rs1.8 trillion at the rate of Rs160/$ was budgeted for the fiscal year 2021-22 for repayment of principal and interest against short-term external borrowing, Eurobond and Sukuk, etc but the budget estimates had to be revised to Rs1.997tr for the said year due to exchange rate loss to Rs175/$.

Therefore, the need for Rs193bn worth of supplementary grant. This included Rs190bn of supplementary grant and Rs2.9bn of technical supplementary grant. Supplementary grants are additional expenditure on budget over and above approved by the parliament while technical supplementary grant is a diversion of funds from one head to another within allocations approved by the parliament.

It may be noted that as part of the federal budget 2022-23 approved by the parliament on June 30, the government secured tens of hundreds of supplementary and technical grants worth hundreds of trillions of rupees covering a couple of previous years including 2021-22. This puts a question mark on the quality of the budgetary process that spans over 5-6 months and has to cover all expenditures and revenues.

Relaxation of import ban

The ECC also relaxed for one-time the ban imposed on May 19 on the import of non-essential and luxury items to contain a massive outflow of foreign exchange. “In order to resolve the hardship cases, the ECC granted one-time special permission for the release of consignments stuck at the ports due to contravention framed under SRO598(I)/2022 of May 19, only for those consignments which have landed at ports or airports in Pakistan on or before June 30, 2022”, an announcement said.

The Ministry of Commerce had come up with the proposal on the request of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to relax the ban on consignments “which were ready to be shipped but were delayed due to freight congestion and in the meantime ban was imposed on May 19”. The FPCCI had demanded to defer the imposition of the relevant order or allow the release of “held up/in-transit consignments, which would give ample time to businesses to realign their business strategies”.

It was reported that several such consignments had either reached Pakistan and are lying in ports or are due to arrive “shortly”. The commerce ministry said a meeting presided over by the finance minister had already agreed to allow ‘one-time release of such consignments’.

Likewise, the ECC also suspended certain conditions on the import of timber/wood till Aug 31 because of the ‘hardship case of timber importers’ as the consignments were supplied against contracts months ago and the shipments had already arrived at ports. Under the decision, the date of implementation of the Import Policy Order (IPO 2022) regarding timber and wood falling under HS Codes 4401 to 4409 will remain suspended till Aug 31 i.e for the bills of lading issued Aug 31.

The meeting was informed that IPO 2022 conditions could not be met because these were supplied against contracts entered into months ago and relevant documents could also not be provided because consignments were in pipeline when the regulations were enforced. Pakistan Timber Merchant Group and All Pakistan Timber Traders Associations had held meetings with ministries of commerce and finance at the highest level for relaxation.

Customs had reported that about 224 containers of timber/wood had arrived at various ports where

importers had no valid import permit and plant protection release order and since the consignments had reached, the relevant documentation from the import origin country could not be met.

National disease emergency

The Ministry of National Food Security & Research (MNFSR) proposed a declaration of “National Disease Emergency” on account of the emergence of lumpy skin disease in Pakistan. It also proposed Rs3.8bn funds to fight the disease through National Disaster Management Authority (NDMA) amid a potential economic loss of Rs80.4bn.

Read more: Lumpy Skin Disease + Eidul Azha = A recipe for disaster?

“The ECC after detailed discussion directed MNFSR to prepare a cost-sharing plan after convening a meeting with provincial secretaries concerned and NDMA,” an official statement said. Exotic breeds were more susceptible to lumpy skin disease than local breeds.

The MNFSR reported that although the disease-associated mortality rate was less than 1pc at the moment but could go up to 5pc and the economic losses could involve loss of milk and meat production, abortions, infertility, loss or draft power, damage to hides and affected cattle and possibility of trade restrictions on the export of animal products besides loss of livelihood to farmers and distortion of the milk value chain.

The meeting also constituted an Auction Advisory Committee to oversee spectrum auctions for next-generation mobile services (NGMS) in Pakistan. The 14-member committee will be headed by Federal Minister for Finance and Revenue and will comprise ministers for information technology, economic affairs, power and commerce besides secretaries of finance, information technology and law & justice, representatives of telecom regulator, GHQ and ISI.

Published in Dawn, July 6th, 2022