ISLAMABAD – The government has decided to extend a guarantee of Rs 165 billion credit needed for this year’s wheat procurement target of 6.57 million tonnes, but the guarantee is subject to the availability of credit to be provided by commercial banks, an official source said.
The decision was made at that the meeting of the Economic Coordination Committee of the cabinet (ECC) which met under the chairmanship of Finance Minister Abdul Hafeez Shaikh on Wednesday. The source said the decision to extend guarantees was made after a long debate but the most important issue remained that the commercial banks were reluctant to give additional loan for wheat procurement, as the provinces were still to clear their outstanding dues of Rs 125 billion out of the total availed facility of Rs 301 billion last year.
Punjab, he said, was still to clear Rs 107 billion liabilities from its last year procurement drive, while it was demanding another Rs 83 billion for procuring another 3.5 million tonnes of wheat this year. The meeting was informed that Punjab still had stocks of 2.5 million tonnes from last year’s crop. The meeting decided that the federal government would offer guarantees for the loans but provincial governments would have to negotiate with the banks whether they were interested to provide them the required funds.
The State Bank of Pakistan has already refused any financing for commodity operations.
To help Punjab export its surplus stocks, it was decided that wheat exports would be allowed during the upcoming wheat procurement drive and a suitable cut off would be decided to halt exports. The ECC approved Punjab’s plan to procure 3.5 million tonnes, Sindh 1.3 million tonnes, PASSCO 1.3 million tonnes, Khyber Pakhtunkhwa 0.4 million tonnes and Balochistan 0.07 million tonnes.
