ISLAMABAD - Apart from allowing sugar export, Economic Coordination Committee (ECC) of the Cabinet on Saturday approved bailout package worth Rs 2.9 billion for Pakistan Steel Mill (PSM) as it failed to pay salaries to their staff in last three months (June, July and August).

The ECC which met with Finance Minister Senator Ishaq Dar in the chair approved a three-month bailout package of Rs 2.9 billion of which Rs 1.5 billion would be released in September, Rs 700 million in October 2013 and Rs 700 million in November. This will include workers’ salary of two months.

The top economic decision-making body of the country also decided that PSM would remain a public sector enterprise. While discussing a proposal for an interim relief for the Pakistan Steel Mills, the ECC decided that the Board of Investment chairman and Ministry of Industries should come up with a proposal for a long-term solution to the problem at the next meeting. The ECC also decided to export sugar after reviewing the current stock. The committee was told that in view of surplus position in the country and an expected bumper crop, sugar mills might be allowed to export a total of 500,000 tons of sugar, 250,000 tons by October 2013, and the remaining in November 2013.

The committee also decided that sugar stock position in the country would be reviewed on monthly basis while quota should be allocated on ‘first come, first served’ basis by SBP. “Export should be made against irrevocable letter of credit or a contract with 25% advance and shipment should be made within 45 days of the registration of contract with the SBP,” the committee further decided.

The ECC took this decision subject to the condition that sugar industry would clear the outstanding dues towards growers at the earliest and start crushing sugarcane in Sindh by November 1, 2013, and in Punjab by November 15, 2013. The ECC also decided to reduce inland subsidy from Rs 1.75 to Rs 1 per kg. The decision is likely to earn a foreign exchange of $ 480 million.

The State Bank of Pakistan governor informed the meeting that bank had received the first installment of US $ 550 million from the International Monitoring Fund, which would increase the foreign exchange reserves to US $ 10.4 billion.

While reviewing the key economic indicators of the economy, reasons behind increase in inflation were analysed thoroughly. The finance minister said the prime reason behind increase in inflation was that artificial inflation rates were maintained by the previous government by holding back increase in tariff rates. The meeting noted that the rising trend had now been stemmed in the last week.

While expressing satisfaction over the stock position of sugar in the country, which is at present 2.229 million tons, the ECC directed the Trading Corporation of Pakistan to purchase 100,000 tons to maintain strategic reserves. Similarly, the ECC was told that the wheat stock available at present was 7.043 million tons as compared to 6.750 million tons in the corresponding period last year.

The ECC expressed satisfaction that there were oil reserves for 85 days in the country as compared to 29 days in the corresponding period last year. This improvement, the ECC noted, had come about as a result of clearance of circular debt by the government.

The ECC was informed that exports in the month of July 2013 increased by 9% worth US $ 2.62 billion. The ECC also discussed the need for a comprehensive strategy to bring in quantum growth in the exports of the country as the exports during the last few years had been around US $ 25 billion annually.

The finance minister said that value addition, focus on non-conventional items and indentifying new markets were necessary for increase in export. The ECC decided to constitute a committee with Federal Minister Ahsan Iqbal as its chairman. The BOI chairman, secretaries, commerce, planning and finance and the FBR chairman would be its members. The committee would submit its recommendations to ECC within a month for quantum increase in exports of the country.

The ECC expressed satisfaction over increase in collection of revenues by FBR, which had increased by over 20 percent in July-August 2013 as compared to the corresponding period last year. The ECC hoped FBR would redouble its efforts to achieve the target of Rs 2,475 billion.

The ECC was told that a large-scale manufacturing had shown an increase of 4.2 percent. The ECC, however, expressed dissatisfaction over the negative growth in sectors like engineering products, automobiles, wood products, electronics and fertilizers, and directed the Ministry of Industries to examine the decrease of growth in those sectors and come up with concrete recommendations to improve these sectors.

The ECC, on the recommendation of the Engineering Board and a Committee comprising Board of Investment, Industry and Commerce approved M/s Yamaha Motorcycle Industries to have qualified under the new entrant policy for motorcycle industry as an industry with new technology. The decision will clear the way for a foreign direct investment of US $ 150 million. The ECC noted that this was the first foreign investment in the country which reflected the confidence of the foreign investors in the investment and economic policies of the PML-N government.

It would be pertinent to mention here that Yamaha Motorcycle had been running from pillar to post for the past four years trying to seek government clearances on various counts.

The Pakistan Poverty Alleviation Fund also made a comprehensive presentation to the ECC about its performance and plans to enhance its work and effectiveness.