ISLAMABAD: A delegation of Nishat Group met Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh to apprise him of the damage caused by Covid-related economic downturn to large-scale manufacturers.
PM’s advisers on commerce and austerity, federal industries minister, finance secretary and the Federal Board of Revenue (FBR) chairperson were also present on the occasion, according to a statement issued by the finance ministry on Wednesday.
The delegation shared that owing to coronavirus-induced demand compression, the size of balance sheets of large manufacturers was no longer maintainable, adding that the major contributing factor was the “massive labour cost”, especially in labour-intensive industries like the garments sector.
They maintained that any arrangements to avoid permanent laying off or furloughs were putting excessive strains on the liquidity position of businesses, which were anticipating slow economic recovery, hence hedging against potential solvency issues.
The delegation head stressed the need for the government’s enhanced role in easing the liquidity position of large businesses, besides urging the government to formulate a scheme for cost-sharing between public and private sectors.
The finance adviser empathized with the delegation members and updated them about the current implementation status with regard to the PM’s economic stimulus package worth Rs1,240 billion.
The delegation was asked to put up a precise case for financial facilitation since the State Bank of Pakistan was already running a scheme for payroll protection.
The commerce adviser on the occasion called for working out the impact of reversion of orders by US from China and other countries, and its potential impact for manufacturers in Pakistan.
The industries minister requested the delegation to provide details of the proposal in terms of cost-sharing arrangements, along with details about requirements of different sectors, so that the government could ensure a balanced treatment to all key contributors to GDP.
The finance adviser concluded the meeting with the understanding that a specific proposal be crafted regarding upscaling of existing SBP scheme, as too many interventions carry the risk of diluting the impact. He further emphasized that upper bounds of additional liability be calculated through defined parameters so that evidence-based decision may be shaped before the next budget.
