The Ministry of Finance in Pakistan has refused to provide additional funds of $393 million to the Ministry of Health in the country from the annual budget for the procurement of coronavirus vaccines. He advised the relevant officials to instead arrange for loans from international sources, in order to ensure that the exchange rate of the country does not come under pressure. Moreover, it stressed the transparency of these deals.
This refusal from the Finance Ministry came only 10 days before the approval of a $500 million loan from the Asian Development Bank (ADB) to purchase additional jabs of the coronavirus vaccine. The ADB board has informed that it will be approving the required loan on the 6th of August under the APVAX facility, so that Pakistan may acquire the doses it requires.
The Health Ministry has turned to the budget of the country for additional supplementary grants since the government did not make any allowances in the most recently approved budget for the procurement of vaccines.
The special committee on the purchase of vaccines recently had a meeting, during which the additional secretary of finance told the participants that as of now, the foreign exchange reserves are not very stable. He advised the concerned agencies to look for alternative options and arrange loans.
Yousaf Khan, the Secretary of Finance, stated that there are significant funds available with the ADB, Asian Infrastructure Investment Bank, and the World Bank. According to him, these could be used as a desirable option instead of looking for funds in the annual budget.
Up until now, the Finance Ministry has successfully provided around $450 million for the procurement of vaccines for the months of June and July. These funds were allocated from the country’s annual budget.
At the moment, the gross foreign exchange reserves being held by the State Bank of Pakistan (SBP) stand at a figure of $18 billion. These are largely built by acquiring foreign loans. In the past couple of days, the rupee has already been under pressure, while being traded at Rs.161 to a dollar.
Sources further revealed that at a meeting of the Economic Coordination Committee (ECC), the Governor of SBP, Dr. Reza Baqir, urged that the federal government provide a proper schedule for the purchase of vaccines in advance. He said that this will allow the country to avoid any pressure on the value of the rupee in the future.
The National Disaster Management Authority (NDMA), which is the agency responsible for vaccine procurement, is not ready to secure any foreign loans. It said that they require additional disclosure, which includes the price of the vaccine.
Sources from the Finance Ministry asserted that the NDMA has continuously insisted that the supplementary grants should be transferred directly into its accounts. However, the ministry itself is reluctant to do so on account of the lack of transparency.
The sources said the NDMA has been insisting that the supplementary grants should be directly provided into its accounts, which the Ministry of Finance is reluctantly doing due to lack of transparency.
In the last fiscal year, the Ministry of Finance had given Rs25.3 billion to the NDMA for vaccine procurement but the actual spending remained at Rs16.6 billion.
The health ministry has moved a summary for the approval of the cabinet for a $393 million or Rs63.5 billion supplementary budget to procure vaccines for the months of August and September.
Unlike the practice of routing summaries related to supplementary funds through the ECC, the health ministry has started sending the summaries directly to the cabinet that results in lesser scrutiny of the additional demands.
The summary for a $250 million supplementary grant for vaccines procurement for the month of July did not go to the ECC for approval and landed directly in the cabinet. A senior cabinet official said the ECC route was avoided due to an emergency situation.