On Monday, the cabinet’s Economic Coordination Committee (ECC) approved a support package of more than Rs50 billion for small and medium-sized enterprises (SMEs) and allowed negotiations with 11 countries to place a $1.8 billion debt on hold for about a year.
An ECC meeting chaired by Advisor to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh also approved Rs3.02bn additional funding for the fencing of the Pakistan-Iran border on a proposal made by the Defense Ministry.
Minister for Industry and Production Hammad Azhar told reporters after the meeting that the ECC-approved Rs50.69bn package will provide indirect cash flow support to small and medium-sized enterprises via prepaid electricity and benefit some 3.5 million people. He said last year’s combined bills of May, June, and July will be used as a baseline to be sponsored by the government once those businesses start to operate. The facility will stay open for six months.
The minister said the ‘Chota Karobar-o-Sanat Imdadi Kit’ scheme was prepared by the Ministry of Industry and Production in collaboration with the Small and Medium Enterprises Development Authority and aimed at covering approximately 95 percent of commercial consumers with connected loads of up to 5KW and 72 percent of industrial consumers with connected loads of up to 70KW.
The sums will be allocated to the 3.2 million commercial business accounts and from 350,000 to 400,000 small industrial connections. The Ministry of Finance said the scheme would benefit commercial consumers up to Rs100,000, and industrial consumers up to Rs450,000 for three months.
The basis period for estimating electricity consumption will be May-July 2019, and the correct average would be used for meters whose data on electricity consumption is not valid for the full base period. In order to access the service, prepaid electricity bills of three months or total bills will be needed during the base period. The utilization period of the expanded financial assistance will be six months beginning in May-June 2020.
The ECC also provided for disbursement of Rs2.5bn block allocation under the scheme for Azad Kashmir and Gilgit-Baltistan through special arrangement. It directed the Ministry of Industry and Production to implement similar agricultural relief packages like tubewells, as well as transporters and the microfinance sector.
Hammad Azhar said the government was also working on a loan package for small businesses without protection or collateral until the two packages — Rs75bn for laborers and daily wage earners announced a few days ago and Rs50bn approved Monday — came into full force after which applications will be invited.