Pakistan still assessing G20 debt relief

ISLAMABAD:


The finance ministry said on Tuesday that the situation regarding debt relief for G20 countries remains unclear and that Pakistan could get the maximum possible relief of $1.7 billion.

“We are still reassessing the situation and the impact of aid from G20 countries could be $1.7 billion,” Finance Secretary Naveed Kamran Baloch told a meeting of the Finance Standing Committee. ‘National Assembly.

The secretary’s statement came a day after the International Monetary Fund (IMF) said Pakistan had yet to formally approach G20 countries for debt relief.

The situation regarding debt relief remains unclear and there could be some clarity by the time the standing committee meets, the finance secretary said, adding that the Ministry of Economic Affairs was also analyzing the situation.

While no official request was made to G20 countries for debt relief, then why was misleading reports circulating in the media that Pakistan would get $12 billion in relief, said Senator Sherry Rehman in a statement. “This will not only cause chaos and confusion inside Pakistan, but it is also embarrassing in the eyes of the international community,” the senator added.

There was detailed discussion in the standing committee about the need for relief for people and businesses after Covid-19 hit the economy which is now set to contract for the first time in 68 years.

The committee expressed dissatisfaction with the performance of Utility Stores Corporation (USC) which it said could not guarantee the availability of subsidized food items despite a 50 billion rupee subsidy from the government. The parliamentarians also questioned the amount of the Prime Minister’s relief package which the government said was 1.25 trillion rupees and according to the IMF report about 500 billion rupees.

Relief from interest payments to individuals and businesses affected by the foreclosure cannot be granted until the federal government provides a subsidy to compensate for the losses of banks, the governor of the State Bank said on Tuesday. of Pakistan (SBP), Dr. Reza Baqir. The governor made the statement during the standing committee meeting, chaired by PTI’s Faizullah Kamoka.

“If the government wishes, it can provide a grant to ease interest payments,” the SBP governor said while answering questions about deferring surcharge payments and providing interest-free loans.

Baqir said it will be up to the federal government to decide if it wants to relieve bank shareholders or those of private companies. The markup is very important for banks for better cash management, he added.

The central bank postponed loan principal repayments but gave no relief on interest payments.

“Interest rate restructuring should not be left to banks that are unwilling to do so,” said PML-N’s Ali Pervez Malik. He said banks were also reluctant to provide loans to pay salaries and the central bank should take these matters into their own hands.

Interest payments that were due in March can now be negotiated until September, Baqir said. It is in the interests of banks to protect their creditworthy customers, the governor said.

Banks should not be allowed to twist their customers and the central bank should play its role proactively, Kamoka said. Committee members also called for interest-free loans to be made available to small and medium-sized businesses.

The chairman of the committee has proposed that the Prime Minister’s relief program should also be extended to overseas Pakistanis who have lost their jobs and are returning to Pakistan.

The governor also informed about the implementation of the measures that the central bank announced to alleviate the financial difficulties. The SBP had announced relief from loan principal repayments and concessional loans to pay employee salaries. About 1 trillion rupees of loans come due over the next year and in the first two weeks of the facility banks have extended principal repayments by 71 billion rupees, Baqir said.

He said about 250 companies have also approached 22 banks for concessional loans to pay salaries. So far, the banks have received a funding request worth Rs 20 billion, the governor said. Releases under the PM’s relief package also remain extremely low and so far only Rs 88 billion has been disbursed out of the announced Rs 1.25 trillion package, according to the finance secretary’s briefing .

The Finance Secretary said Rs25 billion was disbursed to NDMA, Rs10 billion to USC and Rs53 billion was disbursed among the poor beneficiaries of the BISP scheme. But committee members from all political parties criticized USC’s performance and urged the Treasury to be extra careful when releasing funds. The chairman of the standing committee said that in his constituency, five utility stores had been closed while there were also reports of misappropriation in the purchase of pulses.

He hinted at sending the case to the Federal Investigative Agency if USC leadership could not satisfy the committee at the next meeting.

The finance secretary told the committee that an effective mechanism for disbursing Rs 200 billion for daily betting will be finalized within two days.

Despite repeated questions about the exact impact of the Rs 1.25 trillion package on the budget, the finance secretary did not give parliamentarians a figure.

Published in The Express Tribune, April 22n/a2020.

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