A gradual recovery in Pakistan is expected in the fiscal year 2021 as the country’s economy reopens, says a report released by the International Monetary Fund (IMF). The report — “Policy Actions Taken by Countries” – reviews various steps Pakistan has taken since March to deal with the Covid-19 crisis.
The IMF notes that the near-term economic outlook of the country has worsened notably, and growth is estimated at –0.4 per cent in FY 2020. According to this report, since mid-April, the federal government, in coordination with the provinces, has been gradually easing lockdown arrangements, by allowing ‘low-risk industries’ to restart operation and ‘small retail shops’ to reopen with newly developed Standard Operating Procedures.
In addition, restrictions on domestic and international movements have been lifted and educational institutes are expected to restart on July 15. ‘Selective’ lockdown arrangements remain in place, through the closure of shops on weekends and the sealing of specific areas of high risk.
A relief package worth Rs1.2 trillion was announced on March 24, which is now being implemented and will be pursued in the fiscal year 2020-21. The report then details various measures taken by both federal and provincial governments to ease the economic impact of this pandemic.
The key measures by the federal government: elimination of import duties on emergency health equipment; cash transfers to 6.2 million daily wage workers, cash transfers to more than 12m low-income families; accelerated tax refunds to the export industry, out of which 65pc have already been disbursed, and financial support to SMEs and the agriculture sector.
The report notes that the economic package also earmarks resources for an accelerated procurement of wheat, support for health and food supplies, an emergency contingency fund, and a transfer to the National Disaster Management Authority for the purchase of Covid-19 related equipment.
The report also mentions the provision of tax incentives to the construction sector to address the acute employment needs generated by the lockdowns. The provincial governments, according to this report, have been also implementing supportive fiscal measures, consisting of cash grants to the low-income households, tax relief and additional health spending.