By Staff Reporter
ISLAMABAD: The Economic Coordination Committee of the cabinet approved a Rs100 billion supplementary grant for the prime minister’s austerity fund on Thursday to finance subsidies on petroleum products and shield consumers from price swings linked to developments in the Gulf region.
Finance Minister Muhammad Aurangzeb chaired the meeting, which signed off on a summary from the Ministry of Finance seeking a technical supplementary grant of Rs100 billion for immediate transfer to the fund. According to an official statement, the ECC was told that the prime minister had ordered the mobilisation of Public Sector Development Programme resources to cover the price differential on fuel and protect households from international oil-market volatility.
The funding will come entirely from rationalising and surrendering PSDP allocations across ministries and divisions. The exercise was coordinated by the Ministry of Planning, Development and Special Initiatives in consultation with the principal accounting officers of the affected departments. The statement emphasised that the reallocation was designed to limit disruption to priority and well-performing projects while freeing up the necessary fiscal space.
Initial surrenders have already been received, with the remainder still being finalized, the statement said. The PSDP has already been cut by Rs100 billion, bringing the total to Rs900 billion.
The government has separately notified the opening of the Prime Minister’s Austerity Fund 2026 to crowdsource resources and blunt the impact of the sharp rise in diesel and petrol prices caused by the war in the Gulf region. All proceeds will be accepted at State Bank of Pakistan branches, government treasuries, National Bank of Pakistan outlets and other scheduled banks.
The fund is open to donations from both domestic and international donors as well as contributions from abroad. Overseas payments will be routed through Pakistan’s diplomatic missions and remitted to the State Bank, which will issue detailed accounting procedures. The finance ministry has created ten separate fund heads, including accounts for special deposits, relief funds, the Prime Minister’s Austerity Fund 2026, and dedicated funds for Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Azad Jammu and Kashmir, Gilgit-Baltistan and state-owned enterprises.
Accounts for the fund will be maintained by the accountant general of Pakistan revenues in Islamabad, the relevant provincial accountant generals and the heads of state-owned enterprises. The Ministry of Finance will administer the fund.
In a separate decision, the ECC approved the procurement of up to 1 million tonnes of wheat. The purchase must be conducted through a transparent and competitive process executed by the private sector, the statement said. The Ministry of National Food Security and Research had sought approval to buy 3 million tonnes for federal strategic reserves under the Interim National Wheat Policy 2025-26, also through private-sector participation. The committee received a briefing on the current supply-demand balance, including latest production estimates, evolving weather patterns and existing public and private stocks. While crop conditions have improved, uncertainties remain, requiring a cautious approach to reserve building, the statement said.
Officials discussed the need to balance market stability, farmer incomes and fiscal discipline while avoiding premature interventions that could distort price signals or create uncertainty. The panel stressed the importance of distinguishing between strategic and commercial reserves and ensuring that any procurement matches actual requirements without imposing unnecessary fiscal or storage costs. As a result, the ECC limited the approval to 1 million tonnes and instructed the ministries to refine key elements — including financial implications, pricing benchmarks and operational modalities — in consultation with the Finance Division before final execution. Procurement volumes and financial commitments will remain flexible and responsive to updated crop assessments and market conditions, the statement concluded.
Copyright © 2021 Independent Pakistan | All rights reserved
