Wheat import allowed

The Economic Coordination Committee (ECC) of the Cabinet has decided to allow import of 0.3 million tons of wheat to bring down its prices in the local market, subsequent to reported shortage of wheat that led to escalation of flour prices in the country.

The meeting chaired by Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh decided that wheat would be imported by the private sector by withdrawing regulatory duty to the extent of the approved quantity.

The meeting further decided that wheat import would be allowed till March 31, 2020 to ensure that local wheat that will be available from the start of April is picked up at right price from the market. The meeting also issued instructions for immediate release of stocks held by the PASSCO and the provincial departments.

The ECC also approved a proposal by the Ministry of Industries and Production to reduce the Gas Infrastructure Development Cess (GIDC) on gas consumed by the fertilizer manufacturers from Rs 405 to Rs 5 per bag so that this benefit could be passed on to the farmers.

The ECC allowed the raising of Rs 200 billion on the request of Ministry of Energy (Power Division) from the Islamic banks as fresh facility through Power Holding Private Limited by way of issuance of Pakistan Energy Sukuk-II against assets of the DISCOs/GENCOs as collateral through open competitive bidding to procure financing in a fair and transparent manner. The amount will be utilized for the purpose of funding the repayment liabilities of the DISCOs. The ECC approved the proposed mechanism by the Ministry of Finance for the grant of sovereign guarantees and decided that all requests for government guarantees are to be accompanied by requests for guarantees by governing bodies of PSEs. Additionally: (i) every request must be reviewed and endorsed by the concerned administrative ministry/department of the relevant entity; (ii) audited financial statements of previous year prior to issuance of guarantee is mandatory for evaluation of guarantee request; and (iii) business plan including an explanation of the business model and financial projections for at least 5 years as well as a note explaining the following: (1) whether its need for guarantee is short-term or long-term, (2) business model followed by the entity since inception or over the last 5 years, whichever is less, (3) financial as well as non-financial performance of the entity since its inception or over the last five years, whichever is less, (3) request, along with justification, for the type and amount of guarantee needed by the entity and the timelines over which it is required.

The Finance Division would then evaluate the request internally and finalize its recommendations with the approval of the secretary finance.

The ECC also approved the report on proposed exemption of 5 percent sales tax on cotton seed cake. The meeting was briefed that in case the exemption of sales tax on cotton seed cake cannot be introduced during current fiscal year 2019-20, the same can be considered for inclusion in the Finance Bill 2020-2021.

The ECC granted approval to technical supplementary grant of Rs 96.652 million of National Book Foundation in favour of Ministry of Federal Education and Professional Training ; and technical supplementary grant amounting to Rs 15 million for centralized procurement of ICT infrastructure to ensure e-readiness of the federal government for implementation of e-governance program was also approved.

The ECC granted approval to the request of the Ministry of Interior for a technical supplementary grant amounting to Rs 458 million for payment of subsistence allowance to personnel of civil armed forces deployed in the UN Peacekeeping Missions.

Reuters adds: Prices of flour and bread shot up last week as the ingredient disappeared from shops and wholesale markets, while bread makers shut in protest at what they called government pressure to sell the staple at controlled prices.

"It is not possible for me to sell bread for eight rupees a piece if I buy flour bags at high prices," said Sheraz Khan, a shopkeeper in the Rawalpindi.

"Gas prices have also shot up multiple times since this new government came into power," he added estimating that the bill for his gas-powered oven had increased four times.

Pakistan's energy pricing regulator has proposed yet another hike, which officials say is likely to be approved.

Monday's import decision was made by the Economic Coordination Council, with the first shipment expected to arrive by Feb. 15, the finance ministry said in a statement, adding that it would waive regulatory duties on the grain, which could be shipped in until March 31.

It was not yet clear from which country or countries Pakistan will import wheat. A finance ministry official said that private sector buyers could import wheat from wherever they wanted.

Pakistan exported more than 600,000 metric tonnes of wheat from late 2018 to June 2019, its statistics bureau says. Although the government banned exports in July last year, 48,000 metric tonnes was still sent overseas until October 2019.

Economic experts say it made no sense to export the wheat after poor crop yields in the last harvest, and called for an inquiry into the exports despite the ban.

"Someone made billions," said opposition party leader Khawaja Asif, adding that he suspected the wheat crises might be the result of a scam.

Rising wheat prices have drawn sharp criticism of Khan's government, already under tremendous pressure after a key party in his coalition government quit his cabinet, and other allies also raised questions over the government's performance.

Pakistan is a mostly agricultural country that normally grows enough to meet the needs of its population.

Opposition parties and some economists have called for an inquiry into why Pakistan needs to import wheat when it was exporting the grain until late last year.