The federal government has conditionally approved $150 million funds to procure the coronavirus vaccine for 5% of the country’s population. It has also decided to request G-20 countries for additional debt relief of $915 million.
The Economic Coordination Committee (ECC) of the cabinet “approved, in principle, the provision of technical supplementary grant of $150 million for the purchase of the Covid-19 vaccine,” said a handout issued by the Ministry of Finance on Friday.
The ECC also approved diverting funds meant for religious education towards the prime minister’s skill scheme. It also allowed importing another 340,000 metric tons of wheat at $286.75 per ton price, taking the total imported quantity to over 2.2 million tons to bridge the shortfall.
It also approved Rs19.7 billion to clear liabilities of about 9,350 employees of the country’s biggest industrial unit – the Pakistan Steel Mills (PSM). These employees will be laid off.
The Ministry of National Health Services (NHS) had requested the ECC to approve a technical supplementary grant of $150 million out of the funds reserved by the Finance Division under the head of Covid-19 Relief Measures.
However, the ECC chairman did not authorize sanction from the budget and instead directed the health ministry to negotiate a loan with the World Bank for procurement of the vaccine.
“The ECC further directed the Ministry of NHS to discuss the proposal with the WB and other donors in coordination with the Economic Affairs Division so that they could assist in providing financial facility for the procurement of the vaccine during the first phase and for the procurement of additional quantities in future as needed,” said the Finance Ministry.
The Ministry of NHS briefed the ECC that this shall be the first phase of procurement and the amount of vaccine will suffice for the most vulnerable 5% of the population.
This population will include health workers and people above the age of 65 years. Around 10 million people would be provided a vaccine cover under the above arrangement.
The health ministry had also requested that the ECC should underwrite the $150 million funding, in case the vaccine manufacturing companies fail to develop the vaccines. The ECC did not agree to that.
The ECC directed the Ministry of NHS to draw a holistic proposal regarding the pricing and risk mitigation mechanism for the procurement of Covid-19 vaccine for provision on a wider scale, in consultation with the relevant stakeholders.
A member of the ECC had proposed that the government should charge the cost of the vaccine from those who can afford it in order to lessen the burden on the budget. It is expected that a potent vaccine would be available for its use in the first and the second quarter of next year.
The Ministry of NHS had sent a letter to the GAVI – originally the Global Alliance for Vaccines and Immunization – showing its intent to avail the window to secure COVAX (Covid vaccine), free of cost or at subsidized rates for 20% of its population.
But the subsidized vaccine will be available somewhere in the latter half of 2021. GAVI, officially Gavi, the Vaccine Alliance is a public–private global health partnership with the goal of increasing access to immunization in poor countries.
The $150 million had been sought to book vaccines for 10 million individuals in advance with at least two or three leading manufacturers who have entered into phase three trials.
Debt relief request
The ECC approved the request of the Economic Affairs Division to proceed with the formal request for availing the G-20 Debt Relief for the extended period of January-June 2021, according to the Ministry of Finance. Pakistan expects to avail another temporary relief of $915 million during this period.
The Finance Ministry said approval of the federal cabinet would also be required for signing of the bilateral debt service suspension agreements.
The extension in debt relief initiative will bring additional relief of around $915 million depending upon exchange rate and interest rate variations. The relief is for a total period of six years, including one year grace period. But Pakistan will have to submit a formal request to these countries.
On April 15, the G-20 nations announced a freeze on debt repayments from 76 countries, including Pakistan, during the May to December 2020 period, subject to the condition that each country would make a formal request.
Last month, the G-20 club decided to further extend the moratorium period till June next year under the G-20 Covid-19 Debt Service Suspension Initiative, The government had earlier assessed the cumulative relief quantum at $1.8 billion for May-December 2020 period.
Pakistan has assured the G-20 members that it would not contract new non-concessional debt during the suspension period other than the agreements under the initiative or in compliance with the limits agreed under the IMF Debt Limit Policy or the World Bank Group Policy on non-concessional lending.
The G-20 countries had announced the debt relief to help the poorest countries to use the created fiscal space to increase social, health or economic spending in response to the crisis. A monitoring system was expected to be put in place by the international financial institutions.
The G20 – or Group of Twenty – is an international forum for the governments and central bank governors from 19 countries and the European Union (EU). It was founded in 1999 with the aim to discuss policy pertaining to the promotion of international financial stability.
Pakistan Steel Mills
The ECC also approved two technical supplementary grants for “initiating the process of retrenchment of the PSM” for an amount of Rs19.7 billion.
In September, the ECC had approved to lay off 9,350 employees of the PSM. The Ministry of Industries and Production has now sought Rs19.7 billion to pay off the liabilities of those who will be fired.
In this year’s budget, the Ministry of Finance had allocated Rs16 billion.
It has already given Rs11.4 billion of the money to settle the liabilities of the retired employees. Rs3.9 billion are earmarked for paying the salaries to the employees in this fiscal year.
The Finance Ministry had proposed that Rs19.7 billion may be allocated out of Finance Division’s demand No 147 that deals with loans and advances by the federal government. The amount then may be treated as loan to the PSM.
The ECC approved Rs500 million additional budget for Prime Minister’s Special Package to Implement “Skills For All Strategy as Catalyst for TVET Sector Development in Pakistan”. However, this money has been diverted from the “Directorate General of Religious Education” budget.
Prime Minister’s Special Package of Rs9.9 billion for “Skill for All ” had to be implemented in one and half years. However, only Rs450 million were spent in the last fiscal year.
The ECC also approved the import of 340,000 metric tons of wheat at $286.75 per ton price. The ECC was also briefed on the status of wheat import through the Trading Corporation of Pakistan. The total quantity to be imported is now 2.248 million metric tons.
According to the Ministry of Finance, the ECC also discussed the issue of the government of Sindh’s decision to withdraw its earlier request for acquiring imported 60,000 metric tons wheat.