The great Covid dole.

Byline: Khurram Husain

NEWS is coming in that the agreement reached between the government and the IMF for restarting the programme includes up to Rs200 billion of continuing spending for Covid support, an amount that is substantially lower than the unspent funds committed by the prime minister under his relief package announced at the start of the pandemic last year. The news has not yet been confirmed officially by the Fund or the government, but has been reported by the intrepid Shahbaz Rana.

The Fund had hinted at this in its last statement when it said the fiscal strategy to be followed under the terms agreed 'allows for higher-than-expected Covid-related and social spending to minimise the short-term impact on growth and the most vulnerable.' We do not yet have details on how the government proposes to spend this additional Rs200bn but note the distinction the IMF draws in its language between spending to support growth and spending to support the poor.

There are two different pathways available to the government to commit its resources in the name of Covid-related measures. One of these is to pour funds into the pockets of wealthy controllers of capital in the hope it will trickle down to the poor in the form of employment and perhaps rising incomes. The second pathway is to put the money directly into the pockets of the poor, through targeted schemes, and wait for it to percolate up in the form of rising demand as the poor use these funds to support their consumption.

Which of these is the government likely to emphasise? The answer is made easier today than it was at the start of the pandemic back in March when the Rs1.2 trillion relief package was announced in the name of helping the poor because we now have a near 10-month track record to draw upon.

The government is serving the poor with its words and the rich with its deeds.

How has the government actually utilised those funds? From their words it would seem they have put the interests of the poor front and centre while disbursing this money. But their actions tell a different story. Let's start at the beginning and note three things.

First, at the very outset it was puzzling how the Rs1.2tr figure was computed. For example, Rs280bn was for wheat procurement which is a routine activity that happens every year starting from March anyway. How was this billed as a Covid relief measure? Another Rs100bn of the total was in the form of 'tax refunds' to industry, which is also hard to...