Think-tank identifies key policy interventions

By Staff Reporter
Sunday – April 26, 2020
ISLAMABAD: The advisor to the prime minister on finance and revenue (A-PM-FR) Abdul Hafeez Sheikh chaired, Saturday, the second meeting of the think-tank, recently constituted under the directions of prime minister (PM) Imran Khan, to deliberate on the COVID-19 (coronavirus) related economic downturn and mitigation of ensuing risks; the forum identified key areas for policy interventions, including monetary affairs and banking sector, fiscal matters and public finances, social safety nets, small medium enterprises (SMEs) and large businesses, commodity prices, public health challenges and role of private sector and non government organisations (NGOs).

According to an official statement, 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.

A-PM-FR apprised the forum about developments at G-20 (group of twenty) forum regarding debt relief package. There is potential for $1.8 billion debt deferment for one year under this, whereas proceeds worth $1.4 billion under international monetary fund (IMF) have already been received.

Participants highlighted the need for further downward revision in policy rate coupled with passing on the benefits of slashed oil prices in global market to public.

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.

Need for further liquidity for banks was discussed as strong and vibrant banking sector is essential to boost economy under such strong recessionary headwinds.

Ways to further encourage remittances, agriculture financing and timely lifting of crops and vegetables from small farmers were analysed.

The forum discussed the need and scope for bailout package for large businesses and exporters apart from gauging the viability of reduction of general sales tax (GST) on consumer goods, from 17 percent to 5 percent, to kick-start consumer spending for next 2 years.

The constraints of federal board of revenue (FBR) amid high revenue targets in a shrinking economy were highlighted by finance secretary. Decision in this regard will be made after detailed consultations.

The progress of ongoing cash disbursements under Ehsaas program were shared. The need for gathering reliable data on recently laid-off works and timely cash transfers to the most vulnerable were emphasised.

Economists within the think-tank stressed for the need of designing public sector development programme (PSDP) to facilitate labor intensive projects apart form 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.

Professionals within group stressed for the need of oil price hedging, power sector debt securitisation and creation of fiscal space through rescheduling of foreign and domestic debts.

The need for designing lending programs for housing sector participants came under consideration including facilitation of end-users.

The massive scope for mortgage backed financing in Pakistan was also highlighted. A-PM-FR took lead in picking most urgent themes for proper policy deliberations and decisions.

He shared that PM of Pakistan may participate in the next session to give boost to the work of this forum which has been constituted to provide intellectual and professional insights to the ministry in designing and implementing incentives for economy in pragmatic fashion.

Advisor decided that interventions with highest, medium and low impacts will be sorted out and aligned on the basis of short, medium and long term time horizons so that most essential tasks are pushed on priority basis, with proper funding and execution arrangements.

It was also decided that international think-tanks will be engaged for cross-leaning 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 other members, of the think-tank, include Shaukat Tareen, Ishrat Husain, Ijaz Nabi, Sultan Ali, Arif Habib, Waqar Masood, the advisor to the PM on commerce and the finance secretary.