A meeting of the think tank recently formed by the prime minister to deliberate on the Covid-19-related economic downturn and mitigation of ensuing risk on Saturday, emphasized the need for further downward revision in policy rate, coupled with passing on the benefits of slashed oil prices in the global market, to the public.
Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh chaired the 2nd meeting of the think tank, and participants of the meeting underlined the need of further cut in policy rate as the focus of the deliberations remained on strengthening of aggregate demand and supply of the economy, with emphasis on lower-income groups and small firms.
The need for further liquidity for banks was discussed as strong and vibrant banking sector was critical to boost economy under such strong recessionary headwinds.
The members of the think tank include Shaukat Tareen, Dr Ishrat Husain, Dr Ijaz Nabi, Sultan Ali Allana, Arif Habib, and Dr Waqar Masood. Advisor to PM on Commerce and Finance Secretary are also part of it. The meeting after detailed discussion identified key areas for policy interventions including monetary affairs and banking sector, fiscal matters and public finances, social safety nets, SMEs and large businesses, commodity prices, public health challenges and role of private sector and the NGOs.
The meeting also decided that international think tanks will be engaged for cross-learning for select policy making players in Pakistan, so that robust interventions are designed to bring relief to economy and most deserving segments of public.
The ways to further encourage remittances, agriculture financing and timely lifting of crops and vegetables from small farmers have also been analysed.
The meeting also discussed the need and scope for bailout package for large businesses and exporters apart from gauging the viability of reduction of the GST on consumer goods, from 17 percent to five percent, to kick-start consumer spending for next two years.
The constraints of the FBR amid high revenue targets in a shrinking economy were presented by the finance secretary, and the meeting agreed that decision in this regard would be made after detailed consultations.
The progress of ongoing cash disbursements under Ehsaas programme was also shared with the participants.
The meeting emphasized the need for gathering reliable data on recently laid-off works and timely cash transfers to the most vulnerable were emphasized.
Economists within the think tank stressed for the need of designing the PSDP to facilitate labour intensive projects besides crafting robust agriculture financing plans.
The need for public private partnerships was elaborated to create fiscal space within public sector through these off-balance sheet financing arrangements, which encourage private sector participation in public-sector initiatives.
The participants stressed for the need of oil price hedging, power sector debt securitization, and creation of fiscal space through rescheduling of foreign and domestic debts.
The need for designing lending programmes for housing sector participants came under consideration including facilitation of end users.
The massive scope for mortgage backed financing in Pakistan was also highlighted.
The Advisor to PM on Finance underlined the need for proper policy deliberations and decisions and stated that the Prime Minster may be requested to participate in the next session to give boost to the work of think-tank, which has been constituted to provide intellectual and professional insights to the ministry in designing and implementing incentives for economy in pragmatic fashion. He also informed the meeting about developments at G20 forum regarding debt relief package.
There is potential for USD 1.8 billion debt deferment for one year under this, whereas proceeds worth USD 1.4 billion under the IMF have already been received.
The forum has been mandated to provide platform for collective thinking on the emerging situation resulting from the Covid-19 related medical crisis and its spillover to economy.