Khan Announces Financial Stimulus, Calls For Debt Relief For Developing Nations

IMF has announced it would consider Islamabad’s request for financial assistance

DESPARDES — Prime Minister Imran Khan has announced a stimulus package of several hundred billion rupees for laborers, lower fuel prices, reduced or abolished taxes on food items, amid ongoing lockdowns in major cities designed to curb the spread of the COVID-19 virus.

Khan has also called for debt rescheduling and economic assistance for the developing countries. Media report citing Foreign Office said the call “has gathered traction in recent days, evidenced by the joint statement of IMF and the World Bank calling for suspension of debt payments for poorer countries”.

According to a report, the IMF has announced it would consider Islamabad’s request for financial assistance under IMF’s Rapid Financing Instrument (RFI) facility to shore up the country’s foreign exchange reserves and budgetary support.

“Our team is working expeditiously to respond to this request so that a proposal can be considered by the IMF’s executive board as soon as possible,” said IMF Managing Director Kristalina Georgieva in a statement released to the media by the Fund’s Islamabad-based office.

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At home, the stimulus announced by Khan’s government aims to buffer the damages that would be faced by the poor and the middle-class and the economy as a whole due to businesses being shut down by the virus. The key points are as follows:

  • Labor—Rs. 200 billion has been earmarked to cater to laborers who might be rendered jobless during the lockdowns.
  • Exports—Rs. 100 billion in tax refunds have been allocated, and interest payments have been deferred to encourage them to support their labor.
  • Small and medium industries—Rs. 100 billion have been set aside for the sector; its interest payments have also been deferred. They will also be provided concessional loans with low interest rates, while farmers would receive lower input costs.
  • Low-income families—the government has set aside Rs. 150 billion for impoverished families, which would be spread across the next four months in the form of a Rs. 3,000 monthly allowance. The recipients would be determined through collaboration between the provinces and the federal government.
  • Expansion of Panah Gah—the numbers and capabilities of existing shelters would be expanded, and measures introduced to screen all people entering.
  • Utility Stores—the government has set aside Rs. 50 billion for the company to ensure the consistent availability of basic necessities. Plans to budget Rs. 280 billion for wheat procurement from farmers were also announced.
  • Fuel—petrol, diesel, kerosene and light diesel would see their prices reduced by Rs. 15, from March 25.
  • Electricity and gas—households who utilize 300 units or less of electricity would have their bills deferred over the next three months; similarly gas consumers who have bills equal to or less than Rs. 2,000/month would be able to pay bills in installments over the next three months.
  • Medical workers, equipment—Rs. 50 billion has been allocated for the procurement of protection equipment of medical workers who are at the forefront of the fight against the virus.
  • Food items—all existing taxes would be temporarily abolished or reduced to lower costs for consumers.

In addition to the stimulus package, Rs. 100 billion has been set aside for use in case of an emergency to counter the after-effects of the lockdowns. The prime minister said the National Disaster Management Authority (NDMA) would be granted Rs. 25 billion to procure kits, equipment, and other items from other countries.

The Khan government in its diplomatic outreach on Covid-19 pandemic, according to the Foreign Office, has focused on A) the need for providing relief in repayment of loans and economic assistance to developing countries so that they could focus on dealing with the pandemic; B) removal of US sanctions on Iran that were impeding its fight against the Covid-19 pandemic, being the worst-affected country in the Middle East; C) and lifting of lockdown and communications blockade imposed by Indian occupation forces on Occupied Kashmir.