Pakistan seeks $600 million aid to fight virus outbreak — minister

Residents wearing facemasks as a preventive measure against the COVID-19 coronavirus, wait for their turn at a coronavirus registration and screening counter at the Pakistan Institute of Medical Sciences Hospital in Islamabad on March 19, 2020. (AFP)
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Updated 20 March 2020

Pakistan seeks $600 million aid to fight virus outbreak — minister

  • Screens 1 million suspects of coronavirus
  • Considers converting hotels, expo center into quarantine facilities

KARACHI: Pakistan’s Economic Affairs Division is finalizing around $600 million emergency package with international financial institutions to deal with COVID-19 outbreak across the country, Hammad Azhar, Minister for Economic Affairs, announced on Thursday.
“It includes reallocations and fresh financing. This will be in addition to local funding that is being made available,” he said in a tweet.
The minister said that emergency funds of approximately Rs.7.5 billion from the Asian Development Bank (ADB) backed National Disaster Risk Management Fund (NDRMF) had been made available for the country’s National Disaster Management Authority (NDMA).
“This is in addition to the funds already made available by finance division for immediate use by authority. Reallocations from foreign funded projects also being diverted toward it,” he added.
World Bank and the ADB collectively pledged $588 million to help Pakistan fight the pandemic.
“Ministry of Planning cleared an amount of $238 million from World Bank funding and endorsed another $350 million funding offered by the Asian Development Bank (ADB) in support for the COVID-19 emergency response and to address the socio-economic disruption associated with it”, a statement issued by the ministry on Wednesday said.
Funds will be utilized for the establishment of isolation centers across Pakistan and purchase of additional equipment needed to fight the pandemic.
“We are working with government of Pakistan on that (funding) and decision would be announced next week”, Mariam Altaf, spokesperson of World Bank told Arab News on Thursday.
Total number of confirmed virus cases in Pakistan jumped to 384 on Thursday with two reported deaths.
The country’s southern Sindh province is the worst hit due to large number of Pakistani pilgrims returning from Iran. Tehran has reported 18,407 cases of so far with 149 new deaths.
“Federal Director General Health on Thursday informed that over one million people have been screened so far,” according to a statement issued after a special inter-provincial meeting for assessing the impact of coronavirus pandemic on Pakistan’s economy was held under the chairmanship of Deputy Chairman Planning Commission, Muhammad Jahanzeb Khan, in Islamabad.
Pakistan has taken measures including partial lockdown in major cities and towns to combat the spread of virus. The south Asian country is planning to convert hotels and Karachi Expo center into isolation centers to accommodate the coronavirus positive patients, officials said.
“The Sindh government has also announced to set up isolation center at Karachi Expo Center and provide virus testing equipment to remote purposely set up centers”, Abdul Rasheed Channa, spokesman for Chief Minister Sindh Murad Ali Shah, told Arab News.
“The World Bank has committed $10 million for Sindh to combat COVID-19 but it is not yet received as its approval is awaited from the executive board,” Channa said.
Planning ministry on Wednesday approved “Pakistan National Emergency Preparedness and response Plan for COVID-19” to address the pandemic.
The emergency project focuses on taking measures through additional resources for strengthening the integrated disease surveillance and response system across the country through establishing isolation rooms, ensuring availability of Infection Prevention and Control (IPC) equipment and protective clothing for the health teams, timely diagnostics and procurement of equipment and ventilators for critical case management across the country.
“It also included establishment of a real time surveillance mechanism for early detection and embedding of prevention and control measures to halt/minimize local transmission”, planning ministry statement said.
Global institutions World Bank, ADB and IMF have announced $14 billion, $6.5 billion and $50 billion initial packages to support companies and countries in their efforts to prevent, detect and respond to the rapid spread of COVID-19.


Pakistan’s industrialists hope for tax cuts, relief measures in budget

Updated 10 min 37 sec ago

Pakistan’s industrialists hope for tax cuts, relief measures in budget

  • Business community demands reduction in rates and number of existing taxes for the revival of sluggish economy
  • Economists believe revenue collection and locust control will pose major challenges to the government

KARACHI: As Pakistan focuses on simulating growth and job creation in the upcoming federal budget, the country’s business community called for slashing taxes and introducing relief measures to bring the economy out of its sluggish mode while economists predicted that revenue collection would continue to constitute a major challenge for the government.
Pakistan is expected to present its income and expenditure plan for the next fiscal year (FY2020-21) in the coming week, with a focus to spur the economic growth without imposing new taxes.
“The focus of the upcoming budget is to stimulate growth and create jobs. The focus of the [$8 billion] stimulus package is toward providing support to business, in particular [small and medium enterprises] through payroll loans at subsidized rates, deferral of principal and interest payments for one year and quick disbursement of all as refunds to business,” Dr. Abdul Hafeez Shaikh, Adviser to Prime Minister on Finance and Revenue, told Arab News last week in an exclusive interview.
He also categorically denied that there would be new taxes in the upcoming budget.
Pakistan’s business community expects that the government will come up with a relief package for the revival of the country’s economy to avoid its further weakening amid the COVID-19 pandemic.
“We have proposed that the government should give relief to industries across the board like the one given to the construction industry because it is vital for the revival of the economy,” Agha Shahab Ahmed Khan, President of the Karachi Chamber of Commerce and Industry (KCCI), told Arab News. “The reforms and recovery will automatically follow.”
Industrialists say the government must focus on the means of creating wealth by adopting appropriate measures and offering suitable incentives such as the ones witnessed in other countries. “If there is no wealth creation, there will be no wealth distribution. This may also lead to social disruption in the country,” the KCCI president said, adding: “We have suggested that sales tax should be brought down to a single digit from 17 percent to spur business activities.”
Industrialists also hope that apart from revising the tax rates, the number of taxes will also be reduced by the government. “We expect that the number of taxes will reduce as part of the ease of doing business initiative under the current circumstances. In Punjab, the government has imposed about 130 different taxes,” Almas Hyder, an industrialist and former president of the Lahore Chamber of Commerce and Industry (LCCI), told Arab News.
“The government must expedite the refund process,” she continued, adding: “I say this because this has impacted the cash flow of companies.”
Muhammad Ahmed, President of the Islamabad Chamber of Commerce and Industry (ICCI), concurred with Hyder, saying: “There is no doubt that refunds are being paid, but income tax refunds have not been issued. We should be given permission to adjust that money with the government in the shape of customs duties or sales tax.”
The ICCI president called for measures to make the upcoming budget business-friendly in the prevailing environment.
“The budget should be business-friendly since that will help us make the economy flourish. If new businesses cannot be set up, at least the existing ones that have suffered setbacks should be allowed to survive and sustain in these difficult times,” he added.
As business community demands relief in the upcoming budget, the country’s economists predict that the government is likely to face major revenue constraints due to a decline in the collection rate within the current economic framework. “If you have no income, you will not be able to make expenditures,” Dr. Abdul Qayyum Suleri, member of the government’s Economic Advisory Council (EAC), told Arab News.
“The second major challenge the government is facing is the locust attack which is going to cost the country about Rs 1 trillion in the worst case scenario. If the damage is contained, the loss will be about Rs 250 billion,” he added.
However, Dr. Khaqan Najeeb, who was part of the budget-making process last year since he worked as an adviser with the finance ministry, suggested that the next budget could be crafted with a different approach, keeping in mind resource generation through tax compliance, deficit reduction by curtailing expenditures, and deficit financing by shifting to non-debt creating instruments.
“Shifting the financing of budget to non-debt creating instruments is the only way to flatten the curve on debt build-up. Divestment, past recoveries, collecting dividends from state-owned companies, arrears of taxes and energy, all can contribute in financing the deficit. This can restore the public’s flagging faith in the integrity of the policymakers to break the debt cycle,” he added.
Dr. Suleri said that apart from debt servicing, defense and administrative costs and development expenditure’s additional resources would be required to fund the health sector and locust control operations.
“Pakistan will need about $15 billion of additional borrowing amid remittance, foreign investment and export decline,” he noted while observing: “Two sectors – energy and loss making public sector enterprises – will be under pressure since the International Monetary Fund may object to budget allocations. Increase in salaries and pensions may fall into this category.”
Economists expect that few ongoing development projects will be financed while major share of funds is likely to be diverted to the health sector in the current situation.