PM's coronavirus package: There will be need for only Rs 519 billion extra funding: IMF

The International Monetary Fund (IMF) has stated that there will be need for only Rs 519 billion extra funding in the current fiscal year for Prime Minister's Relief Package of Rs 1.240 trillion for corona-affected sector.

This was in response to a Business Recorder query as to why as per IMF's Rapid Financing Instrument (RFI) documents a decline in post-Covid expenditure from pre-Covid estimate of Rs 10,204 billion to a projection of Rs 9835 billion has been noted for 2019-2020 despite the Rs 1.2 trillion Corona relief package announced. IMF Resident Representative Teresa Daban Sanchez replied that the government's large fiscal package has not translated into a huge increase in expenditure. The reason she stated was that it will be implemented by reallocating budget funds from other less urgent uses, and from savings that appear during the year.

"As regards why the government's large fiscal package has not translated into a huge increase in expenditure because it will be implemented by reallocating budget funds from other less urgent uses, from savings that appear during the year, etc, in a responsible way. Therefore the spending will be in the tune of R1,240 billion as the government committed, but there will be need for only Rs 519 billion of extra funding," she added.

On March 16, Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh told media that expenditures incurred on containing coronavirus would not be part of the current fiscal year's budget deficit.

An official of finance ministry said the government is expecting considerable savings from provincial and federal PSDP budgets of over Rs 460 billion due to a sharp decline in utilization of releases since mid March due to coronavirus and subsequent lockdowns across the country.

He further clarified that there was a difference between releases and utilization and stated that the amount released on account of PSDP by Ministry of Planning, Development and Reforms does not necessarily mean actual utilization of the funds.

He added that relevant ministries and divisions and other departments are authorized PSDP releases as per laid down procedure but the actual utilization is reported when the amount is disbursed to them by Accountant General of Pakistan Revenue (AGPR).

Additionally, he said that the government is expecting over Rs 260 billion savings in debt servicing as according to finance ministry one percent cut in discount rate leads to saving of Rs 50 billion in debt servicing.