A delegation of Nishat Group met Adviser to the Prime Minister on Finance and Revenue Dr. Abdul Hafeez Shaikh to apprise him of the damages done by COVID-19 to the economy and large scale manufacturers (LSM).
According to a press statement issued by the Finance Ministry, Advisor to Prime Minister on Commerce Razak Dawood, Minister Industries Hammad Azhar, Dr. Ishrat Hussain, Finance Secretary and Chairperson Federal Board of Revenue (FBR) were also present in the meeting.
The delegation discussed that COVID-19 induced demand compression, while the size of balance sheets of large manufacturers is not maintainable, adding that the major contributory factor is massive labor cost especially in labor-intensive industries like the garments sector.
Any arrangements of avoiding permanent laying off or furloughs are putting excessive strain on the liquidity position of businesses, which are anticipating slow economic recovery, hence hedging against potential solvency issues.
The head of the delegation stressed on an enhanced role by the government to ease the liquidity position of large businesses, highlighting the need for crafting schemes for cost-sharing between public and private sectors.
The finance adviser empathized with the participants and updated them about the current status of implementation of the prime minister stimulus package worth Rs. 1,240 billion.
The delegation was asked to put up a precise case for financial facilitation and its parameters as the State Bank of Pakistan (SBP) had already been running a scheme for payroll protection. The advisor to the prime minister on commerce asked them to work out the impact of reversion/cancellation of orders by the United States, China and other countries, and its potential impact on 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 can ensure a balanced treatment to all key contributors to gross domestic product (GDP).
The finance advisor concluded the meeting with the understanding that a specific proposal should be crafted regarding the up-scaling of the existing scheme of SBP 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 decisions may be shaped before the next budget.