ECC approves circular debt management plan

ISLAMABAD: While approving the provision of Technical Supplementary Grants (TSG) for arrangements of the SCO Summit, the Economic Coordination Committee (ECC) of the Cabinet has approved the Circular Debt Management Plan (CDMP) to reduce the escalation of the pace of the monster of Circular Debt (CD) under the IMF conditions.

The government is committed to hiking electricity tariffs in a timely manner to fetch Rs36 billion during the current fiscal year. The circular debt has already peaked to Rs2.4 trillion by the end of the last fiscal year. There is a need to address the flow of the circular debt through effective efficiency improvement measures. The CDMP plans to reduce the flow of CD. The CD flow was negative Rs27 billion for FY-22 and Rs57 billion for FY-23. For FY 2023-24, the CD flow was Rs83 billion.

The base line for CD flow on latest assumptions for FY 2024-25 is expected to be Rs1,077 billion which is planned to be mitigated at Rs36 billion in the CDMP FY 2024-25 through timely tariff increases, improvement in losses and fiscal support.

According to official announcement, Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired the meeting of the Economic Coordination Committee of the Cabinet at Finance Division.

The Ministry of Information & Broadcasting (MoIB) presented a summary requesting a technical supplementary grant (TSG) of Rs95.822 million to settle the outstanding dues related to the 23rd Shanghai Cooperation Organization’s (SCO) Council of Heads of Government (CHG) meeting. After deliberation, the ECC directed the ministry to re-appropriate the funds from its allocated budget for the fiscal year 2024-25. In case of a shortfall of funds at the end of the fiscal year, the Finance Division will allocate a technical supplementary grant as needed.

Another request from MoIB for an additional TSG of Rs536.1 million for crucial digital initiatives was discussed. The ECC similarly directed the Ministry to re-appropriate the required amount from its FY 2024-25 budget, with the possibility of supplementary funds being allocated later, if required.

The Ministry of Industries and Production brought forward a summary regarding the Peshawar High Court’s decision on the export of sugar from Khyber Pakhtunkhwa. The ministry emphasised that based on national data, the sugar production in Khyber Pakhtunkhwa is less than the province’s annual consumption of 0.979 million MT. The local deficit is usually met by sugar supplied from surplus-producing provinces such as Punjab and Sindh. Therefore, no sugar shortage is expected in Khyber Pakhtunkhwa, even with the current and any future exports allowed by the ECC. As a result, the ECC reiterated its earlier decision based on the provided national figures. However, the request and suggestions from the province of Khyber Pakhtunkhwa were duly noted.

The Ministry of Law and Justice presented a summary for the surrender of Rs151.787 million from the Ministry of Housing and Works, to be transferred to the Supreme Court of Pakistan for the repair and maintenance of its buildings. The ECC approved the transfer of these funds through a technical supplementary grant for FY 2024-25.

A summary from the Ministry of Energy (Petroleum Division) was also presented, seeking approval for the Sale Purchase Agreement (SPA) for the supply of POL products between Pakistan State Oil (PSO) and SOCAR Azerbaijan. The ECC approved the signing of the SPA.

The Ministry of Energy (Power Division) submitted the Circular Debt Management Plan for FY 2024-25. The ECC approved the plan, which aims to reduce liabilities in the power sector and enhance financial sustainability.

The Ministry of Interior requested a TSG amounting to Rs650.35 million to cover costs related to the SCO Summit 2024, repairs of Safe City cameras damaged during violent protests, and maintaining law and order in Islamabad. The ECC directed the ministry to re-appropriate the funds from its allocated budget for FY 2024-25.

In another matter, the Ministry of Interior presented a summary seeking Rs2.70 billion spent on arrangements and beautification of Islamabad for the 23rd SCO Summit. Following detailed discussions, the ECC decided that the Capital Development Authority (CDA) and the Ministry of Interior should get a third-party cost and expenditure verification before bringing the summary back for further consideration.

At the end of the meeting, the ECC also reviewed the situation of price hikes in pulses (Gram and Mash) and chicken. The ECC showed concern over the situation and asked NPMC to monitor the situation in consultation with Ministry of National Food Security and Research and provincial administration to provide relief to common man at the earliest. Moreover, the ECC decided to keep reviewing the prices of essential food items in order to ensure benefits of decline in inflation may reach the common man.