ECC authorizes the import of 500,000 tonnes of wheat

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ISLAMABAD:

The government on Tuesday approved the import of 500,000 metric tons (MT) of wheat at 103 rupees per kilogram – a cheaper rate than the previous tender – as it faced the challenge of allocating 54 billion additional rupees for food subsidies just five days after the implementation of the new budget. .

The decision to import wheat was taken by the cabinet’s Economic Coordinating Committee (ECC) which also allowed rupee-based trade with Afghanistan for a year to ease pressure on foreign exchange reserves. It also allowed for a relaxation of the import ban on goods that had already arrived in the country by June 30.

The ECC has approved the lowest bid from Cargill Int PTE/Cargill Agro Foods Pakistan at the rate of $439.4 per ton for 110,000 MT for a total of 500,000 MT wheat import, according to the Ministry of Finance. The total contract price is $220 million.

The ECC has requested the Ministry of Food Security to explore the possibility of importing wheat with three-month deferred payments due to external sector constraints. However, private sector parties should not load wheat until confirmed letters of credit for imports have been opened with banks.

Previously, Pakistan imported 500,000 tons of wheat at $515.4 per ton, bringing the contract price to $258 million. The new offer is 15% lower than the previous contract, but the profit per kg will be only Rs 10 due to the depreciation of the Pakistani currency.

Pakistan is facing a shortage of four million metric tonnes of wheat and so far it has finalized wheat contracts for one million tonnes. The ECC meeting was informed that a government-to-government agreement with Russia was to be finalized this month for the import of another million metric tons of wheat.

The Ministry of Industry has presented a summary of an additional subsidy of Rs 53.4 billion to provide five subsidized products in utility shops. The government had budgeted 17 billion rupees for this purpose, but the amount seemed sufficient to meet only a quarter of the total needs.

“The ECC has decided to maintain subsidies on five key products by requesting the Ministry of Industry and Production to develop workable proposals on the subsidy programs, bearing in mind the financial implications,” according to decision.

The request for additional funds of nearly Rs 54 billion comes five days after the implementation of the new budget, indicating that the entire budget exercise has become increasingly irrelevant due to the underestimation of spending needs.

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The Ministry of Industry demanded 19.4 billion rupees to provide a subsidy of 60 rupees per kg of wheat flour and 42 billion rupees for a subsidy of 250 rupees per kg of edible oil. The ministry also demanded 6.3 billion rupees for providing a subsidy of 21 rupees per kg of sugar. The ECC has asked the Ministry of Industry to rework these funding needs keeping in mind the tight fiscal space.

The ECC has approved the request of the World Food Program (WFP) for the purchase and reservation of 120,000 tons of wheat from the imported wheat stock of Pakistan Agricultural Storage & Services Corporation (Passco) on the latest price of import.

The amount of wheat supplied and the cost and incidentals would be charged in dollars. The wheat will be ground into flour locally and supplied to Afghanistan by the WFP, subject to a relaxation of the flour export ban to the extent of the current proposal of 120,000 MT of wheat.

In view of the prevailing situation in Afghanistan and on the humanitarian level, the national ministry of food security had requested the supply of wheat to Afghanistan through the WFP.

The ECC did not take a clear decision on the Ministry of Food Security’s request to declare a “national health emergency” due to the emergence of lumpy skin disease in Pakistan and allocated a budget of 3.8 billion rupees for emergency purposes.

The ECC, after detailed discussion, ordered the ministry to prepare a cost-sharing plan after convening a meeting with the relevant provincial secretaries and the National Disaster Management Authority (NDMA), according to the decision.

The ECC has been informed that the expected economic loss to farmers from lumpy disease is Rs 80 billion and it was feared that the disease could spread rapidly across the country due to Eidul Azha. Buffaloes and cows have been affected by the viral disease.

The Ministry of Commerce has submitted a clearance summary for the one-time release of consignments of prohibited items on May 19, 2022, which had reached Pakistan or would reach their payments.

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In order to resolve difficult cases, the ECC granted a one-time special authorization for the release of consignments stranded in ports. The relaxation had only been granted to consignments which landed at ports or airports in Pakistan on or before June 30, 2022.

The nearly two-month ban has proven ineffective in containing the import bill that jumped to $80 billion in the last fiscal year.

In view of the difficult situation of timber importers, the ECC has postponed the application of import permit requirements and plan protection measures until August 31, 2022, i.e. for bills of lading issued until August 31, 2022.

The ECC has also approved another summary from the Ministry of Commerce to allow the import of goods of Afghan origin against Pakistani Rupee and without the requirement of electronic filing of import forms for a period of one year.

Requirements had been relaxed subject to Afghan exporters providing a certificate of origin issued by Afghan Customs proving that the goods originated in Afghanistan.

The ECC has approved a brief from the Ministry of Information Technology requesting the establishment of an auction advisory committee to oversee spectrum auctions for Next Generation Mobile Services (NGMS) in Pakistan. The committee will be headed by the Minister of Finance.

The ECC has approved an additional Rs 193 billion grant for the repayment of foreign loans for the financial year 2021-22, ending June 30. Repayment requirements for foreign loans have increased from 1.8 trillion rupees to 2 trillion rupees due to the devaluation of the rupee.

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