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Economic Co-ordination Committee of the Cabinet which met here on Tuesday with Federal Minister for Finance, Dr Abdul Hafeez Shaikh in the chair, approved financial restructuring of Heavy Electrical Complex and extension/issuance of GoP guarantee for PIAC loans.
Sources said the ECC approved extension in government sovereign guarantee of Rs 5 billion for the Pakistan International Airlines and decided that around Rs 1 billion loan of HEC would be converted into equity before its privatisation. A summary was moved by the Privatisation Commission to the ECC, seeking its approval that loan of HEC be converted into government equity before its privatisation. Finance division has supported the proposal for conversion of loans payable by the company in GoP equity so as to facilitate the privatisation of Heavy Electrical Complex.
The summary for the issuance of government guarantee for issuance of PIAC loans was moved by the defence division, recommending continuation of guarantees by the ministry of finance and roll over them on yearly basis for the term of the loan.
An official said the meeting rejected the proposal of delisting of Roosevelt Hotel in New York from the privatisation list. This was proposed due to slump in the real estate market in the US. According to a statement, the ECC deferred procurement of wheat by public sector institutions, increase in the rate of cotton cess, ex-post facto approval of additional charges for distribution of imported urea from Gwadar Port and state trading in grain.
According to a statement, the ECC was given a detailed presentation on the key economic indicators which highlighted the review of price situation, inflation and its drivers, review of stock position, latest economic indicators, commodities stock situation of wheat, sugar and fertilisers, large scale manufacturing, current account deficit, foreign exchange reserves, workers'' remittances and direct foreign investment .
The ECC failed to take decision about wheat procurement for the current fiscal year as well as its export because of divergent view on the need for strategic reserves. The meeting constituted a committee comprising federal minister for agriculture, official of finance ministry as well as provincial representative on agriculture to decide about total requirement of strategic reserves for the country. The proposal was to curtail the strategic reserves of wheat to one million ton from three million tons in light of the 6.57 million tons wheat procurement.
The meeting would deliberate upon the suggestion of the federal finance minister that under the devolution plan agriculture as a subject shall be devolved to the provinces, thus determining the size of the strategic reserves of wheat should also be decided at the provincial level, or if the same is left to the federal government, the ministry will determine the criteria for setting the strategic reserve of wheat. Later, the federal minister for finance chaired the Cabinet Committee on Privatisation which approved the Capital Market listings of the Exchangeable Bond.

Copyright Business Recorder, 2011

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