Federal government approved a new Rs. 155 billion stimulus package for businesses and unemployed Pakistanis. On Monday, April 27, Economic Coordination Committee (ECC) approved two new economic relief packages for small business and industries. Federal Minister for Industries and Production, Hammad Azhar presented a Rs. 80 billion packages for SME and 75 bn for unemployed workers. The highlights of the package include 3-month payment of power utility bills for small industries by federal government which will provide relief to over 3.5 million business owners. Moreover, Rs.12000 disbursement to unemployed will be achieved through Rs. 75 billion stimulus under the new package.
Federal Cabinet allocates Rs. 81 billion relief for SMEs
In addition to previous economic relief allocated by Finance Ministry under Prime Minister Imran Khan’s economic relief package, the finance ministry and ECC have been working on several other packages to address the Covid-19 crisis.
The economic crisis under the smart lockdown of Federal and provincial governments, has been a tedious task to deal with. The issue is now not limited to daily wagers but overall employees as SMEs are struggling with maintaining their labor. The State Bank of Pakistan has already presented various loan relief packages for businesses to manage finances and avoid large scale layoffs. The refinancing schemes are also launched for easier restructuring of loans for industries.
Read More: SBP further cuts policy rate to 9%
Government to pay 3 months bills for small business owners
Under the Rs. 50 billion packages announced by ECC, federal government will pay monthly electricity bills for small business owners for months of May, June and July. This package will benefit more than 35 lac shop owners. Under the package business owners who have less than 5 KW connections and industrial units who have no more than 70 KW connections will not pay bills for coming three months. According Mr. Azhar, this constitutes more than 80% of shop owners and industries and will greatly affect smooth functioning of these businesses in this time of crisis.
Federal approves Rs. 30 billion Risk Sharing Facility for SMEs under SBP
The Economic Council also created a financing facility in form of subsidy for business owners. Under the Risk Sharing Facility, businesses with maximum sales of Rs. 2 billion can share their loss on principle through this loan scheme. The government will bear around 40% first loss on principle portion of the loan to share loss. This subsidy is provided in order to restrict companies from layoffs due to loss on books. A lot of major companies have laid off a reasonable percentage of their employees recently which has created a crisis in addition to daily wagers.
Pakistan to move towards debt restructuring with G20 nations
The Federal government has approved the ECC’s proposal to approach G20 bilateral creditors for restructuring and suspension of debt under the debt relief suggested by G20 nations. 11 out of 20 countries from G20 are bilateral creditors to Pakistan where Pakistan owes more than $2.6 billion before June FY21. The G20 nations have already suspended payments for Pakistan during this FY20 from June to December.
However, during the next year Pakistan owes $1.8 billion to China, Saudi Arabia, Canada, France, Germany, South Korea, Russia, Japan and United States. The Economic Council along with Finance Ministry of Pakistan will start talks with G20 nations to restructure loan for FY21 to cater to the economic crisis under Covid-19.
Additional 6 million Unemployed Pakistanis to get relief under Ehsaas Program
After a successful first phase of cash disbursement under Ehsaas program, the ECC in coordination with poverty alleviation division is now formulating new list of needy families. Under the new criteria, unemployed workers and more needy families will be added to list of Ehsaas Program for disbursement of Rs.12000 per family. This constitutes around 4 to 6 million more people that will covered under Rs. 75 billion stimulus package approved by Federal government.
Media personnel to be provided relief, Asim Bajwa will handle the task
The Federal government also approved stimulus package for media personnel and reporters who have been affected by coronavirus in terms of health or job. Several media houses have laid off employees based on reduced profitability. Moreover, several media house personnel have been infected with the Covid-19 due to nature of their front line duty. Prime Minister Imran Khan has allocated the responsibility of media related concerns and aid package to newly appointed Information minister Shibli Faraz and special assistant to Prime Minister on media and communication, Asim Bajwa.
Federal making several new stimulus packages for Pakistanis
Apart from today’s approved packages, the ECC is formulating several other stimulus packages for Pakistanis. This includes packages of loans without guarantor for businesses, package for personnel who have been laid off, and new packages for healthcare workers.