ECC approves Rs51bn package for SMEs

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved the prime minister’s relief package of Rs50.69 billion for small and medium enterprises (SMEs) through pre-paid electricity and credit loss subsidy of Rs30 billion for the risk sharing facility for the State Bank of Pakistan’s (SBP’s) refinance scheme to support employment and prevent lay-off of workers.

The meeting of the ECC meeting chaired by Adviser to Prime Minister on Finance Dr Abdul Hafeez Shaikh approved “Chota Karobar- o-Sannat Imadadi package”.

Sources said that Finance Division would make available the funds to the Power Division with an expected cost of Rs12 billion monthly for adjustment against the SMEs electricity bills and savings if any, would be surrendered to the Finance Division.  

They added that over 3.5 million were estimated to benefit from the scheme, whereas total SMEs in the country were estimated at 5.2 million.

The Ministry of Industries and Production has prepared package namely “Chota Karobar-o-Sannat Imadadi Package” in consultation with Small and Medium Enterprises Development Authority (SMEDA) with the objective to provide financial support to approximately 95 per cent commercial consumers with connected load up to 5KW and 72 percent of industrial consumers with connected load of up to 70KW.

Under the package, commercial consumers would be given support up to Rs100,000 and industrial consumers up to Rs450,000 for three months for May-July 2019 based on estimated electricity consumption and for those meters whose electricity consumption data is not available for the full base period, appropriate average will be used.

The ECC also approved Ministry of Defence proposal for allocation of additional funds in the form of technical supplementary grant to the tune of Rs3.02 billion for the fencing of the Pak-Iran border.

On a proposal of the Economic Affairs Division, the ECC accorded in principle approval to the external debt restructuring of the government by availing the G-20 debt relief and engaging with bilateral donors for individual debt suspension with the proviso that agreements to that effect could be subsequently brought to the ECC for approval.

The ECC also allowed Rs2.5 billion block allocation to the AJK and the GB for disbursement through special arrangement.  

The meeting instructed Ministry of Industries and Production to bring up similar relief packages for the agriculture sector including the agricultural tube-wells, as well as transporters and the microfinance sector.

The meeting approved Finance Division proposal with regard to credit loss subsidy of Rs30 billion for the risk sharing facility for the State Bank of Pakistan’s Refinance Scheme to support employment and prevent lay-off of workers for those businesses with maximum sales turnover of Rs2 billion.

The government would bear 40 per cent first loss on distributed portfolio (principal portion only) for eligible borrowers, in case of repayments, after being classified as “loss” as per classification criteria under the respective SBP Prudential Regulations. The banks and the DFIs assigned limits under the SBP scheme would be eligible executing agencies.

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