The federal government is expected to abolish the entire textile sector's untargeted cash subsidies by June 30, 2011 as per the agreement with Asian Development Bank (ADB), sources close to Secretary, Economic Affairs Division (EAD), told Business Recorder.
The Bank has attached this condition under the 'Accelerating Economic Transformation Program' (AETP)-subprogram-III. An inter-ministerial committee discussed progress on the targets set by the ADB against its loan under the AETP. The government has been requested to adopt textile policy 2009-14 and issue new incentives and subsidies under the textile policy in line with best principles of industrial support, approve tax incentives for highly sophisticated textile products and establish a system to differentiate fabrics, made-ups and garments for progressive rebates.
Sources said that the government has decided to eliminate all untargeted cash subsidies by June 30, 2011, besides ensuring that all notifications under textile policy are in line with best principles. It has also been decided to systematically target higher value products, including technical and synthetic textiles.
The indicative policy actions to be taken by the government by June 4, 2011 will also increase FY2011 budget allocation for BISP to provide income support for at least 7 million families. Other targets are rolling out payments under the new targeting system to 0.3 million families in 16 pilot districts, strengthening BISP's fiduciary structure, including reconciliation of the benefit payments and reconstitution of BISP Management Board in accordance with the provisions of the BISP Ordinance, 2009.
Sources said the government has directed the concerned stakeholders to disburse at least 80 percent of all BISP grants under the new targeting system. To address power sector problems, the ADB had asked the government to ensure enactment of Nepra legislation and determine budgetary shortfall due to tariff differential for FY 2010 and identify resources.
The government, sources said, has finalised reforms to minimise tariff differential subsidy to be implemented in FY 2011. It has also been decided to improve the methodology for quarterly tariff determination and fuel price adjustments for smoother implementation. Another decision is to move from universal to disco-wise tariff, initially through quarterly adjustments
The Pakistan Electric Power Company (Pepco) has been asked to adopt 2010-11 business plan with clear targets for (i) net electricity generation and sales; (ii) system losses; (iii) maintaining cost and merit based dispatch for generation plants; (iv) IPPs to be operating at optimal capacity; (v) optimising generation capacity; and (vi) timely reimbursement of cost of units sold to FATA region. Sources said that Pepco has already submitted its business plan to the government.
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