Pakistan’s consumer price inflation eased to 9.5% in April, its statistics office said on Friday, extending a months-long decline as the economy tanks due to the coronavirus crisis despite three interest rate cuts.

The South Asian nation is struggling to keep its economy afloat as the reported number of infections from COVID-19, the highly contagious respiratory disease caused by the novel coronavirus, has risen to 16,817, with 385 deaths.

Consumer price inflation was 10.24% in March after having risen in January to 14.56%, its highest in over a decade, severely squeezing household budgets.

The central bank kept interest rates unchanged at 13.25% in January but, once the coronavirus began battering business and household finances, it slashed rates three times in recent weeks to 9% to help cushion the blow.

Pakistan now faces a balance of payment crisis as the economy heads towards a major recession with a 1.5 per cent contraction forecast in the current financial year ending in June, compared with a pre-COVID-19 forecast of nearly 3% growth, according to the finance ministry and central bank.

Growth is projected to recover to about 2% in the 2021/22 fiscal year.

A steep drop in oil prices, which comprise most of Pakistan’s import bill, has been welcome, allowing pump prices for petrol and diesel to be cut by 27% and 35% respectively since February, with the biggest cut coming on Thursday.

But critics say the government has not passed on the full advantage of the oil price fall to the public, instead raising taxes on petrol and diesel by up to 300%.

With the current account deficit mounting and foreign reserves shrivelling, businesses and industries that were shut to contain the spread of the coronavirus have been allowed to start reopening.

Pakistan agreed a $6 billion bailout from the International Monetary Fund last year and secured another $1.386 billion in rapid financing from the IMF at zero interest last month.

Islamabad is hoping for more bailout packages from the World Bank and other development partners as it plans to file for debt relief from G20 countries and bilateral partners, mainly longtime ally China.

Separately, the Executive Committee of the National Economic Council (ECNEC) has approved four major projects at a cost of nearly Rs250 billion in a meeting held on Thursday at the Cabinet Block with Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh in the chair.

According to a press statement here Thursday, the meeting discussed a proposal for the construction of Lodhran-Multan Section (North Bound 62 kms) of N-5 and construction of 2 flyovers at Railways Crossing at Lodhran Bypass and approved the project at cost of Rs12.434 billion.

Under the project to be completed in 24 months, beside road two flyovers along with three interchanges at Super Chowk and Permit ChowkLodhran and an interchange at Bahawalpur Chowk Multan would be built.

Besides, four minor bridges as well as reconstruction and widening of culverts and urban area improvement at BastiMalook, Multan City and Larr Town would also be carried out under the project.

The reconstruction of existing two-lane northbound and construction of flyovers, interchanges and area improvements would help reduce traffic hazard and congestion on the project road and after completion of the project, a safe, reliable and efficient road facility would be available to the commuters.

The ECNEC also approved a project titled ‘Punjab Human Capital Investment Project’ at a cost of Rs32 billion to strengthen primary health facilities, introduce conditional cash transfer program to encourage the poor to access the health and nutrition support, support economic inclusion for the young parents with children for poverty alleviation and expand and strengthen early childhood education.

The project to be completed in five years would be rolled out in 11 less-developed districts of Punjab, including Bahawalnagar, Bahawalpur, Bhakkar, Dera Ghazi Khan, Khushab, Layyah, Lodhran, Mianwali, Muzaffargarh, Rahim Yar Khan and Rajanpur.

The ECNEC also considered and approved Khyber Pakhtunkhwa Irrigated Agriculture Improvement Project (KP-IAIP) at a cost of Rs30 billion for improvement of 14,260 watercourses, installation of 10,000 acres high-efficiency irrigation system, construction of 5000 water storage tanks, provision of 500 laser land levelers, capacity building, strategic studies and value addition, and project management and monitoring.

Agencies