Islamabad, Pakistan – Pakistani Prime Minister Imran Khan unveiled a $709m package of food subsidies to ease the financial burden on low-income households as the prices of essentials continue to soar in the South Asian country.
Addressing the nation on Wednesday evening, Khan described the benefits package as “Pakistan’s biggest ever welfare programme”.
“This package is of Rs 120 billion ($709.2m), which the federal and provincial governments are giving jointly,” he said. “In this, we are [targeting] the three most important food items, ghee, flour and pulses.”
Under the plan, some 20 million qualifying low-income households will be entitled to a 30 percent discount on the purchase of the three items. The federal and provincial governments will make up the difference to retailers in the form of subsidy payments.
The subsidies will last for six months, Khan said, and are aimed at the poorest households, as classified by the government-run Ehsaas welfare programme.
Pakistani households have been dealing with spiralling consumer price inflation (CPI) in recent months, with October’s CPI clocking in at 9.2 percent compared with a year earlier.
Food inflation for core commodities has been particularly high, with the price of ghee increasing by 43 percent, flour by 12.97 percent and certain pulses by 17.62 percent over the last year, according to data from the Pakistan Bureau of Statistics.
The coronavirus pandemic hit the country’s economy hard, with economic growth slowing to 0.53 percent in 2020, according to the World Bank.
Prices for food, energy and other essential goods have skyrocketed around the world this year as countries cast off COVID-19 restrictions, triggering supply shortages and bottlenecks.
World food prices rose for a third straight month in October, the UN Food and Agricultural Organization said on Thursday, hitting a new 10 year high. Last month’s increase was driven by vegetable oils and cereals.
Khan blamed Pakistan’s inflation on international commodity prices, including petrol, claiming that his government had done a better job than others to absorb global price increases.
“What can we do about this? The inflation that is coming from outside. Let Allah make it so that we have all these things in our country, then we can reduce prices, but [not for things being imported],” he said.
Pakistan, which relies heavily on imports of essentials as well as other goods, has also been hit hard by a devaluation of its currency this year.
The Pakistani rupee has lost 13.1 percent of its value against the US dollar since May.
Khan’s government has expanded welfare spending during the pandemic to address unemployment and poverty, disbursing 179 billion rupees ($1.06bn) in grants to low-income families this year, according to government data.
Consumer Price Inflation, however, appears set to continue to increase, with Khan warning in his speech on Wednesday that the government would likely have to raise petroleum and diesel prices, in response to global oil price increases.
The country remains in talks with the International Monetary Fund on resuming its $6bn bailout deal, which was suspended during the pandemic, with significant obstacles reported on the independence of the country’s central bank and other issues.
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