How did Pakistan's economy perform during Imran Khan's era?

[cric_man]

Pakistan’s Public Debt To GDP Remained Broadly Unchanged According To The IMF
Naeem Aslam

Even giants like the United States and India have had difficulty dealing with the coronavirus pandemic. Donald Trump, Dwayne Johnson, and Ellen DeGeneres have all been infected by this virus. In this situation, Pakistan has succeeded in reviving its economy, which is expected to grow by nearly 4% in 2021, exceeding initial projections.

The State Bank of Pakistan (SBP) initially predicted a 3% growth in GDP, while the International Monetary Fund (IMF) and World Bank predicted 1.5% and 1.3% increases, respectively. The country's per capita income will rise 14.6% from $1,405 in 2020 to $1,610 in 2021.

The services sector, which is forecasted to grow by 4.43% in 2020-2021, is responsible for the majority of the growth. This is certainly remarkable for a country like Pakistan which is becoming successful in expanding its services sector. The agricultural sector's predicted growth is 2.77%, while that of the industrial sector is 3.57%.

Measures Taken By The Government

The bleak situation in India, which has reported an incredible number of 28,441,986 cases and 338,013 deaths, has alarmed both government authorities and medical specialists in Pakistan. Due to the increase in awareness caused by social media in Pakistan, Pakistani citizens have begun to wear masks, which they did not previously.

Last year, the country saw a surge in cases during the Eid-festival, but the government was quick to move this time, imposing partial lockdowns, closing non-essential enterprises, and prohibiting domestic tourism, which helped the country avoid a spike in cases. However, the restrictions imposed have jeopardized the labor class's livelihoods.


The government hopes to have vaccinated 70% of the population by the end of 2021. 5.3 million citizens have been vaccinated so far. With the help of CanSino Bio, a Chinese company, Pakistan has developed its own "PakVac" vaccine, bolstering the country's vaccination program.

Stock Market Sentiment

Last week Pakistan reported the highest traded volumes on the Pakistan Stock Exchange at 1.56 billion shares and 2.21 billion shares respectively on May 26 and May 27. Investors are optimistic because of the populist budget proposal and improved growth forecasts.

Economic Growth

According to SBP’s Governor, Reza Baqir, the unexpected growth in GDP is due to accommodative monetary and fiscal policy. SBP quickly reduced its policy rate by 625 basis points to 7% and released a stimulus amounting to 5% of GDP. In addition, the governor said that the government was able to control the coronavirus situation reporting 12 new cases per million, compared to 62 new cases per million reported globally.

The IMF’s world economic outlook numbers Pakistan's public debt to GDP remained broadly unchanged in 2020 over the previous year, as reported in Bloomberg. This statistic for most emerging countries increased by 10% during the coronavirus pandemic. Reza Baqir explained that this was caused by a "prudent fiscal and aggressive monetary policy."

Inflation

Pakistan recently reported a CPI of 11%, up from 6% a few months ago. The country expects inflation to range between 7% and 9%, with experts predicting that it will be closer to the higher end. According to Reza Baqir, recent high inflation was caused by a small number of products such as energy and food. Because of supply-side factors, he described these factors as "one-time," but officials are prepared to respond quickly to demand-side pressures if they arise.

IMF Program

The International Monetary Fund (IMF) has granted the country a $6 billion Extended Fund Facility (EFF). According to Reza Baqir, who worked at the IMF for nearly 18 years, Pakistan is transitioning from stabilization to growth. He stated that the government was successful in converting a $19 billion current account deficit into a $900 million surplus, as well as more than doubling the country's foreign reserves from $7.2 billion to $16 billion. These objectives were met not through borrowing, but through "high-quality measures."

The Bottom Line

The successful management of the coronavirus pandemic and the success of the IMF program, as evidenced by the growth in GDP to 4%, demonstrate Pakistan's ability to grow and serve as a good investment opportunity.

https://www.forbes.com/sites/naeema...changed-according-to-the-imf/?sh=d15448d61c52

 

[Savak]

Glad to see the one notorious badniyat individual running out of ammo for now

 

[Bewal Express]

A very interesting direct meeting between the farmers and IK. Its a 1st and this is real democracy. Well done IK, and hopefully it will help to propel the poor farmers to higher incomes.

 

[cric_man]

A very interesting direct meeting between the farmers and IK. Its a 1st and this is real democracy. Well done IK, and hopefully it will help to propel the poor farmers to higher incomes.

During 1960-70, Pakistan was on of the largest producers of Wheat, Rice, Cotton and various other grains. I was shocked to know that currently we have been importing lentils from Australia! Height of incompetence for a country which is supposedly agrarian.

 

[Napa]

During 1960-70, Pakistan was on of the largest producers of Wheat, Rice, Cotton and various other grains. I was shocked to know that currently we have been importing lentils from Australia! Height of incompetence for a country which is supposedly agrarian.

Population growth has resulted in higher demand, hence the need for food imports.

 

[Varun]

If we don't have to go the IMF at the end of the 5 years then a massive step forward has been made. I am with you that the mafia will win next time but IK has laid the ground work for stability, let's hope they don't do as they DNA suggests and loot.

Are you predicting that Imran Khan is set to lose the 2023 elections?

 

[Bewal Express]

Are you predicting that Imran Khan is set to lose the 2023 elections?

More likely than not. The mafia are strong and he still hasnt tamed them.

 

[King-Misbah]

More likely than not. The mafia are strong and he still hasnt tamed them.

Imran Khan will win in 2023 in shallah. 2 years is a long time in politics and he will surely build momentum in shallah for election time. Next two years will be growth ia and finance minister is focusing on controlling inflation.

 

[Waseem]

Are you predicting that Imran Khan is set to lose the 2023 elections?

I always had this belief that he would win and my old posts are still there as proof. My key reasons were
- Revival of Economy (despite most difficult period due to inflation)
- Health Insurance roll out
- Separation of South Punjab from rest of Punjab (South Punjab is extremely neglected and now most development work is taking place there). PMLN will be left with only central Punjab (and wont be walk in the park there as PTI will give tough fight)
- Agricultural reforms (PTI already getting more popular in rural areas than urban)
-

 

[Waseem]

These colorful charts and histograms created on PowerPoint will not feed the poor and provide jobs to people.

The common man in Pakistan is aware of the fact PTI government has destroyed the economy.

They have choked businesses and ruined the middle and lower-class with unprecedented inflation.

Under no government was the poor man in such a helpless state as he is under Imran’s government.

They are also not willing to listen to his future projections and tall claims because they know for a fact that Imran and his government can only do hawai firing and make promises that they cannot keep. They can only offer words but nothing practical.

This is why PTI is now desperate to get overseas Pakistanis involved in the 2023 election because they know that the public of Pakistan have lost all faith in them.

The PTI government has proved to be the most incompetent, clueless and underprepared government in history of Pakistan.

Lol very well expected

Exports won't give us rotis
GDP won't give us rotis
CA surplus won't give us rotis

This is EXACTLY what will give us roti kapra and makaan, this is base for what we need unlike idiots of the pats who would borrow more and subsidise items to keep people happy in short term till we run to IMF to avoid loan defaults.

 

[Bewal Express]

Imran Khan will win in 2023 in shallah. 2 years is a long time in politics and he will surely build momentum in shallah for election time. Next two years will be growth ia and finance minister is focusing on controlling inflation.

IA you are right and alot can change in weeks, never mind years. The amazing growth in the middle of pandemic has has started to cause diarrhoea for people here and in the opposition but inflation is the keyissue. Just like economic illiterates like [MENTION=131701]Mamoon[/MENTION] who dont how the value of a currency is reached, there are many others that fail to appreciate what a hit he has taken to bring PK back from the edge of bankruptcy.

 

[Bewal Express]

During 1960-70, Pakistan was on of the largest producers of Wheat, Rice, Cotton and various other grains. I was shocked to know that currently we have been importing lentils from Australia! Height of incompetence for a country which is supposedly agrarian.

Many reasons- population growth, decline of the green belt, water stress, poor incentives for farmers, small holdings etc

 

[Bewal Express]

I always had this belief that he would win and my old posts are still there as proof. My key reasons were
- Revival of Economy (despite most difficult period due to inflation)
- Health Insurance roll out
- Separation of South Punjab from rest of Punjab (South Punjab is extremely neglected and now most development work is taking place there). PMLN will be left with only central Punjab (and wont be walk in the park there as PTI will give tough fight)
- Agricultural reforms (PTI already getting more popular in rural areas than urban)
-

Some real good work going and good story to tell. In Agriculture they are importing Sperm to improve the quality of the cattle to increase Milk production by 3 fold. A lot will depend on what happens to the price oil between now and the election because he cant keep putting off the increase in petrol prices as he has done so atm

 

[Savak]

My fear is that we still have a population influenced by rasgullays, qeemay walley naans which can badly hurt the pti in the 2023 elections

 

[cric_man]

Many reasons- population growth, decline of the green belt, water stress, poor incentives for farmers, small holdings etc

All there, but policies were not made to counter act the issues. Farming techniques have improved tremendously, yield all over the world has gone up many folds. Water issue has been known, but we still wouldn't make dams to take care of it...

 

[Bewal Express]

All there, but policies were not made to counter act the issues. Farming techniques have improved tremendously, yield all over the world has gone up many folds. Water issue has been known, but we still wouldn't make dams to take care of it...

And as you say poor policy. Why would these billionaire crooks care for the poor farmers. And what's interesting is that after IK made his policy on paying farmers on time the Punjab assembly controlled by the PTI and in connivance with the Nooras and Q changed the policy. Shame on Buzdar and the PTI in Punjab for such pathetic actions against the poor farmers. Those guys looked genuinely shocked at IK taking the time to meet them. It's time IK used these direct meetings with the poorer stakeholders to assess the impact of his policies.

 

[Gharib Aadmi]

I always had this belief that he would win and my old posts are still there as proof. My key reasons were
- Revival of Economy (despite most difficult period due to inflation)
- Health Insurance roll out
- Separation of South Punjab from rest of Punjab (South Punjab is extremely neglected and now most development work is taking place there). PMLN will be left with only central Punjab (and wont be walk in the park there as PTI will give tough fight)
- Agricultural reforms (PTI already getting more popular in rural areas than urban)
-

I think the sehat card and South Punjab province should be enough to give PTI the win in 2023. And if the economy recovers their is no chance for the opposition to win, unless they contest elections together under PDM.

 

[Savak]

I think the sehat card and South Punjab province should be enough to give PTI the win in 2023. And if the economy recovers their is no chance for the opposition to win, unless they contest elections together under PDM.

The opposition has many card's up their sleeves ie offering bribes to Judiciary, Election Commission, Police men Bureaucrats

 

[Mamoon]

The damage has been done now. PTI had 8 years in KP and 3 years at the federal level, and they have failed with flying colors.

This is the most clueless, ill-prepared and incompetent government in Pakistan history.

Anyone who has ever had the misfortune of dealing with a PTI representative would testify how dumb and ignorant these people are.

That is why PTI is desperate to seek the votes of overseas Pakistanis. Overseas Pakistanis are delusional and out of touch with reality - they are unaware of the ground realities.

They are fed lies by the PTI social media team and the PTI paid media and they fall for the crap.

They are the last hope for this joker government. Without them, this circus show will get smashed like no tomorrow in 2023.

 

[Rinnegan Sasuke]

My fear is that we still have a population influenced by rasgullays, qeemay walley naans which can badly hurt the pti in the 2023 elections

The only thing that is hurting PTI right now is the crushing inflation rate.

 

[Mamoon]

From street vendors, small business owners, domestic helpers, taxi drivers etc. – all of them are cursing Imran and his government, and this has been his biggest failure and defeat.

 

[OMB]

Govt aims to generate Rs242b revenue

Pakistan shares blueprint with IMF on achieving Rs5.829tr tax target

ISLAMABAD:
The government has proposed to collect Rs242 billion through enforcement measures in the upcoming budget in addition to expanding its list of potential additional taxes.

The development came as the International Monetary Fund (IMF) shows little flexibility on its demand over personal income tax measures.

Sources in the finance ministry told The Express Tribune that during last two days, Pakistan has shared its position on how it wants to achieve the Rs5.829 trillion tax target without taking additional revenue measures amounting to over Rs500 billion.

However, they said that the IMF was not fully convinced and pressed to take personal income tax-related measures in the budget.

“Increasing tax incidence on electricity bills of non-filers, exporters of the services, and taxing the mobile-related services were among a few proposals that have been revived after the IMF did not budge from its demands,” the sources said.

The economic team on Wednesday briefed Prime Minister Imran Khan about the IMF conditions, the sources said, adding the the Ministry of Finance remained tight-lipped about the meeting with the premier.

The sources said that Finance Minister Shaukat Tarin was still trying to avoid taking maximum taxation measures.

However, Special Assistant to Prime Minister on Finance Dr Waqar Masood is said to have opined that the government would have to take a few measures to keep the programme on track.

The finance minister is also inclined to the reduce capital gains tax rate on sale of shares at Pakistan Stock Exchange from 15% to 12%, said the sources.

Enforcement Measures

The finance minister has vowed that he would achieve next fiscal year’s tax collection target of Rs5.829 trillion on the back of administrative and enforcement measures.

Pakistan had initially presented a list of Rs360 billion enforcement measures to the IMF, which it has now cut down to Rs242 billion.

The IMF has historically remained wary of the results of the enforcement measures which, according to the fund negotiators, do not yield any revenues.

The government has now assured the IMF that it would collect additional Rs160 billion at domestic taxes stage without resorting to additional taxes. Another Rs82 billion are assured to be collected on account of customs duties-related administrative measures.

The government has promised with the IMF that it would collect Rs30 billion on account of arrears stuck up at various stages while rationalising its earlier figure of Rs70 billion, said the sources.

It also hopes to collect Rs20 billion through audit and another Rs20 billion through enhanced monitoring of sales tax.

Similarly, the government has informed the IMF that it would collect Rs20 billion by installing track and trace system, also watering down its earlier wish of showing Rs50 billion under this head.

The sources said that collection of Rs50 billion has been shown under the head of integration of Point of Sales of the retail shops. The rest of the enforcement measures are related to monitoring of withholding taxes and court litigation.

In Customs, Pakistan has assured the IMF that it would generate Rs35 billion by curbing smuggling of tea, tyres textile and petroleum products. Similarly, the government has assured the IMF that it will collect Rs30 billion through curbing under invoicing of the imported goods. The rest of the amounts are expected to be generated through auction of confiscated goods and recovery of arrears.

The FBR also shared its plan with the IMF about repayment of refunds in the next fiscal year, which is one of the contentious areas. The member FBR Mohamad Asfhaq told the IMF that the FBR has issued recovery notices in cases where people had claimed undue refunds. However, he did not share details of litigation of such bogus or undue claims cases.

The sources said that the FBR has proposed to impose 1% minimum tax on exporters of services, on the pattern of the exporters of the goods, said the sources. The move, if approved by the Prime Minister, would generate about Rs8 billion in additional taxes in the next fiscal year.

For an additional revenue of about Rs5 billion in next fiscal year, the FBR has proposed that 7.5% withholding tax may be imposed on those domestic electricity users who have monthly bill of Rs25,000 but are not filing their annual returns. The existing limit is Rs75,000.

Another Rs6 billion additional revenue can be generated by expanding the list of retailers and wholesale dealers who are subject to withholding taxes, the sources said.

The FBR was also looking into possibility of getting some additional revenues from use of data services, although according to a decision by the federal cabinet the FBR is supposed to reduce taxes on the telecom sector in the budget.

The advance income tax has to be cut from 12.5% to 10% in next financial year 2021-22 and to 8% in 2022-23. Similarly, the federal excise duty on telecom services has to be reduced from 17% to 16%.

https://tribune.com.pk/story/2304457/govt-aims-to-generate-rs242b-revenue

 

[OMB]

Security Measures: Afghan refugees banned in Abbottabad

The restriction would remain enforced for 30 days, official sources said on Friday.

The district administration has decided to ban the entry of Afghan refugees in the city, confining them to the camps and their residences in the outskirts of Abbottabad.


According to an administrative order through the Abbottabad District Coordination Office, the entry of Afghan refugees living in adjoining areas of Abbottabad has been banned under Section 144 (joining unlawful assembly armed with deadly weapon) of the Pakistan Penal Code (PPC). The restriction would remain enforced for 30 days, official sources said on Friday.

Abbottabad District Coordination Officer Syed Zaheerul Islam has warned that the violators would be dealt under Section 188 (disobedience to order duly promulgated by public servant) of the PPC.

The sources said there are hundreds of Afghan refugees who have been living in and around the city for the past three decades and they are involved in various business activities and services.

https://tribune.com.pk/story/230449a/peace-in-afghanistan-important-for-economic-progress-in-pakistan-fm-qureshi

 

[MenInG]

Finance Minister Shaukat Tarin unveiled the Pakistan Economic Survey 2020-21 at a press conference in Islamabad on Thursday, revealing that the industrial and services sectors had helped the country post GDP growth of 3.94 per cent in the first 9 months of the fiscal year (July to March), significantly higher than the target of 2.1pc.

According to the survey document, the industrial and services sectors surpassed the government's expectations, and the minister particularly highlighted growth in large-scale manufacturing (LSM) which he said expanded 9pc.

The Pakistan Economic Survey is an annual report on the performance of the economy, focusing in particular on major macroeconomic indicators.

Sector-wise growth
Tarin started out by underscoring the impact of Covid-19 in causing the economy to contract last year. But, he said, the decisions of this government under Prime Minister Imran Khan helped the economy stabilise which resulted in improving performance on the growth front.

"The government itself had set [GDP] growth target at 2.1pc and the IMF had predicted and even lower number. But the decisions by this government such as incentivising manufacturing, textiles, construction, and interventions in agriculture have helped the economy recover."

According to the survey, Pakistan has recorded a provisional growth rate of 3.94pc in the fiscal year 2020-21. This came "on the basis of a rebound in almost all sectors".

The agriculture sector grew around 2.8pc against a target of 2.8pc. The industrial sector registered a growth of 3.6pc against a target of 0.1pc, while services grew 4.4pc against a target of 2.6pc.

Last year, when overall GDP growth contracted by 0.4pc, industries and services sectors had posted negative growth of 2.6pc and 0.59pc, respectively.

In the industrial sector, Tarin said large-scale manufacturing (LSM) showed growth of 9pc, playing an important role in helping overall growth.

The minister said agriculture sector growth met its target despite the "cotton crop getting ruined" because yields of other crops compensated for that.

'Focus now on growth'
Tarin said he had told the prime minister it was time to focus on sustainable growth "until we go to 5-8pc GDP growth".

"We will do interventions and take care of the poor. The poor man has been crushed in this stabilisation phase because the dreams we have shown them have been of a trickledown economy. And this can only happen when growth is sustainable and continuous for 20-30 years," he said.

Tarin, however, emphasised that this growth should not be based on borrowing.

"Countries which had sustainable growth, they grew continuously for 20-30 years. What have we done? Every time we grow by borrowing money, which is credit-based growth."

Inflation
The headline inflation measured by the Consumer Price Index (CPI) was recorded at 8.6pc during July-April FY2021 against 11.2pc during the same period last year. The government had targeted inflation of 6.5pc for FY21.

The survey document says this was achieved "due to the government measures for maintaining price stability."

"Inflation in perishable food items increased 0.1pc against an exorbitant increase of 34.7pc during the same period last year," according to the PES.

The finance minister said the government wanted to control inflation "but prices are still high and affecting the common man".

"So the way to solve this is by increasing production and that is why we have focused on agriculture in this budget," Tarin said.

FBR tax collection
Federal Board of Revenue (FBR) tax collection came in at Rs3,780.3 billion, registering double-digit growth of 14.4pc during July-April FY2021 against Rs3,303.4 billion in the same period last year.

The government had set a revised target of Rs4,691 billion for FBR for the full fiscal year, and the target for the first 10 months of the year was surpassed by more than Rs100 billion, according to the survey document.

Current Account
According to the survey, during FY2021, while the world was reeling from the economic impact of the pandemic, Pakistan's "external sector appeared as a key buffer for resilience."

"During July-March FY2021, current account posted a surplus of $959 million (0.5pc of GDP) against a deficit of $4,147m last year (2.1pc of GDP). The main driver of improvement in current account balance was the robust growth in remittances," it stated.

"The inflows accelerated posting a year-on-year growth of 26.2pc during the period under review over the same period last year and thus defying the general expectation of a decrease," it further noted.

Trade deficit

"During July-March FY2021, export of goods grew by 2.3pc to $18.7bn as compared to$18.3bn the same period last year. Import of goods grew by 9.4pc to $37.4bn as compared to $34.2bn last year. Consequently, the trade deficit increased by 17.7pc to $18.7bn as compared to $15.9bn last year," the survey said.

Nominal rise in debt
The finance minister said Pakistan's total debt had increased nominally in the last 9 months.

He said Pakistan's total debt increased Rs1.67 trillion in FY21 to reach Rs38 trillion. "Out of this Rs25 trillion is local debt while around Rs12.5 trillion is foreign debt."

Employment levels almost back to pre-Covid time
The economic survey revealed that before the start of the Covid-19 pandemic, 35pc of Pakistan's population or 55.7m people were employed. This number decreased by around 20 million to 35m after lockdowns were imposed, it stated.

"In July 2020, the government announced [a] package for construction sector. Thus, opening of sectors in which daily wagers were working along with fiscal stimulus and monetary measures made economy recover," it said. As a result, people started working again and the total number of employed people rose to 52.5m or 33pc of the population.

Talking about the figures in his presser today, Tarin credited Prime Minister Imran's "prudent policies on Covid" for the rise in employment levels after the lockdown.

"In the start, our provinces doubted [the policies] too but because of them, 52m people came back to work in October 2020 and only 2.5m people were left [unemployed]," he added.

 

[ChTab]

Federal budget focuses on sustainable economic growth: Tarin

Finance minister Shaukat Tarin on Saturday said the federal budget for the fiscal year 2021-2022 focuses on sustainable economic growth through incentives for various sectors including agriculture, industry and housing.

Addressing a post-budget media conference in Islamabad, the finance minister said the main emphasis of the budget is to protect the vulnerable segments of society.

He said four million households will be accessed through the Ehsaas Survey and they will be provided with interest-free business and farming loans. Tarin further said that such households will also be provided with health cards, with technical training imparted to one member of the household.

Referring to the budget, the finance minister said incentives have been given to uplift the agriculture and industries sectors to increase employability and clarified that incentives to industries are not textile specific, but have also been extended to other sectors.

Tarin added that taxes have been abolished to facilitate the investment in the Special Economic Zones being set up under China-Pakistan Economic Corridor (CPEC) project.

Regarding the IT sector, he said taxes have been rationalised in order to exploit the full potential of the sector and added that the government wants to substantially enhance the sector's exports in the coming year.

For local industries, Tarin said duties have been abolished on almost all the raw materials, which will aid in strengthening local industries and reduce Pakistan's imports.

Tarin also expressed confidence that the price of motor vehicles up to 850cc horsepower will reduce following the tax relief given to the segment and said the incentives given to the SMEs will also help achieve higher growth in the industry.

Informing the media that Prime Minister Imran Khan has given special emphasis to the housing sector, he said it will help allied construction industries.

Talking in regards to the power sector, the finance minister said that subsidies have been increased and efficiency will be brought to the sector. He said DISCOs will be operated through independent boards and will be privatised. He also said line losses will be reduced and recoveries will be enhanced.

Expressing confidence at the revenue target set by the government, Tarin maintained that the tax to GDP ratio has to be enhanced to 20pc in a period of seven to eight years. He said the focus is to expand the tax net instead of imposing additional taxes on the masses.

About PSDP, the finance minister said it has been enhanced 'significantly' to take the country towards sustainable growth.

Answering a question, the finance minister clarified that the federal cabinet did not approve the proposal to enhance charges of SMS, mobile phone calls and internet usage.

Tarin on Friday announced a Rs8.5 trillion tax-loaded budget that he plans to finance by taking Rs4 trillion new debt while also making an attempt to strike a balance between the International Monetary Fund’s (IMF) demands and economic growth.

Tarin presented his first and the PTI government’s fourth budget amid rumpus by the opposition parties in the National Assembly, constantly chanting anti-government slogans.

 

[saeedhk]

Due to mismanagement by the current government, there are widespread power outages. Before the PTI came into power, power outages were pretty much non-existent.

 

[Last Monetarist]

https://tribune.com.pk/story/2308300/foreign-exchange-sbp-reserves-rise-13m-to-161b

The foreign exchange reserves held by the central bank rose 0.08% on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On June 25, the foreign currency reserves held by the SBP were recorded at $16,119.4 million, up $13 million compared with $16,106.1 million recorded on June 18.

The central bank gave no reason for the increase in reserves.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $23,297.4 million. Net reserves held by banks amounted to $7,178 million.

Pakistan borrowed $2.5 billion through Eurobonds on March 30, 2021 by offering lucrative interest rates to lenders aimed at building the foreign exchange reserves.

Pakistan received the first loan tranche of $991.4 million from the International Monetary Fund (IMF) on July 9, 2019, which helped bolster the reserves. In late December 2019, the IMF released the second loan tranche of around $454 million.

The reserves also jumped on account of $2.5 billion in inflows from China. In 2020, the SBP successfully made foreign debt repayment of over $1 billion on the maturity of Sukuk.

In December 2019, the foreign exchange reserves surpassed the $10 billion mark owing to inflows from multilateral lenders including $1.3 billion from the Asian Development Bank (ADB).

 

[Cricket lover 27]

I am hugely disappointed by Imran Khan. All these fancy numbers do not mean anything when reality is very different.

There is no taxation still on upper class. Only the salaried class pay taxes in Pakistan and they are the one who bear the brunt. Irony is that the taxpayers get nothing while the elite who pay nothing or a pittance get facilities like free medical, free fuel etc while the others are left to suffer in this rotten system where even if they step in a government hospital which is supposedly free they have to pay some money because of lack of facilities. We dont even get basic medicine here, I know because I work at one.

A person whose salary is only 40,000 has to pay tax. 40,000 is nothing where everything is so expensive. A person who earns this much can’t even afford his own house or car or have any savings with the current inflation.

The rich gets richer and the poor gets poorer and laws are made only to protect the rich.

This country will soon become Nigeria where there will be no middle class and people either will be very rich or very poor if we don’t start taxing the elite as well for their earnings.

 

[saeedhk]

I am hugely disappointed by Imran Khan. All these fancy numbers do not mean anything when reality is very different.

There is no taxation still on upper class. Only the salaried class pay taxes in Pakistan and they are the one who bear the brunt. Irony is that the taxpayers get nothing while the elite who pay nothing or a pittance get facilities like free medical, free fuel etc while the others are left to suffer in this rotten system where even if they step in a government hospital which is supposedly free they have to pay some money because of lack of facilities. We dont even get basic medicine here, I know because I work at one.

A person whose salary is only 40,000 has to pay tax. 40,000 is nothing where everything is so expensive. A person who earns this much can’t even afford his own house or car or have any savings with the current inflation.

The rich gets richer and the poor gets poorer and laws are made only to protect the rich.

This country will soon become Nigeria where there will be no middle class and people either will be very rich or very poor if we don’t start taxing the elite as well for their earnings.

Has the PTI’s government brought any good changes to the medical sector in terms of infrastructure and management?

 

[OMB]

Pakistan to open new oil, gas exploration blocks

Hammad Azhar invites Japanese companies to invest in energy sector

ISLAMABAD: Pakistan is opening new areas for oil and gas exploration through competitive bidding, which will push massive exploration activities in the country, said Federal Minister for Energy Hammad Azhar on Monday.

During a meeting with the Japanese envoy, he said, “Pakistan has significant oil and gas reserves and opening of new blocks will not only increase the local oil and gas production but will also help save a lot of foreign exchange now used for its imports.”

Speaking on the occasion, Ambassador of Japan Kuninori Matsuda appreciated the government’s policies in the energy sector and extended invitation to the minister for the Asia Green Partnership Ministerial Meeting (AGPM) to be held in October 2021 in Japan.

Matsuda informed the energy minister that Japan has announced Asia Energy Transition Initiative (AETI), which encompasses $10 billion financial support for renewable energy, energy efficiency, LNG and other projects.

The financial aid is targeted at decarbonisation projects in Asia, such as renewable energy, energy saving and conversion to gas-fired power generation from coal-fired power to help with energy transition.

Azhar accepted the invitation to participate in AGPM, and said that international companies including Japanese firms must participate in the competitive bidding of oil and gas exploration blocks.

The minister also apprised the Japanese ambassador of the effective steps taken by the present government to substantially minimise the growth of circular debt from Rs538 billion in FY20 to Rs177 billion in FY21, which has greatly contributed to restoring the confidence of investors.

https://tribune.com.pk/story/2308982/pakistan-to-open-new-oil-gas-exploration-blocks

 

[MenInG]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Congratulations to NCOC members, Ehsaas team & State Bank of Pakistan for effective response to Covid 19 pandemic; and above all thanks to the mercy of Almighty Allah. <a href="https://t.co/C8vQP4D9ku">pic.twitter.com/C8vQP4D9ku</a></p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1412615517425315841?ref_src=twsrc%5Etfw">July 7, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[Napa]

<blockquote class="twitter-tweet" data-partner="tweetdeck"><p lang="en" dir="ltr">Congratulations to NCOC members, Ehsaas team & State Bank of Pakistan for effective response to Covid 19 pandemic; and above all thanks to the mercy of Almighty Allah. <a href="https://t.co/C8vQP4D9ku">pic.twitter.com/C8vQP4D9ku</a></p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1412615517425315841?ref_src=twsrc%5Etfw">July 7, 2021</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

Someone should explain to this guy that if you start at near the bottom you don’t have much space to fall and recovery to original near bottom is quick.

IK’s obsession with with saying something negative about India reminds me of a few Pakistani posters on this forum

 

[MenInG]

Federal Minister for Information Fawad Chaudhry has said the economy has been put on the right track during the three-year rule of the PTI government, which, according to him, is a landmark achievement.

“Prime Minister Imran Khan has the vision to ensure economic stability in the country. The government’s prudent policies have started yielding positive results,” the minister said while addressing a press conference along with Minister for Industries Khusro Bakhtiar on Wednesday.

“A significant improvement has been made in the agriculture and textile sectors during the past two years and there has been a phenomenal increase in yield of wheat, rice, maize, and sugarcane,” he said.

He said agricultural and industrial sectors have been revived due to the prudent policies of the present government. Both the major sectors were adversely affected due to flawed policies of the previous government, he claimed.

The minister said the current account deficit has been brought down to zero and the prices of the daily use items have also been trending downward.

“The latest good news for the people is the reduced prices of cars under a new auto policy. The initiative has been taken to resolve problems of middle and lower-middle classes. A special scheme is being launched for those who want to purchase cars for the first time.”

Responding to a question, he said Minister for Finance Shaukat Tarin has gone abroad for a medical checkup and he would be back on Monday.

To a question about electoral reforms and consultations with the opposition, he said the government has put forward a 49-point reform plan and it is awaiting the response from the PPP and PML-N.

He said Prime Minister Imran Khan will address election rallies in Azad Jammu and Kashmir (AJK) as the chairman of the ruling PTI. He said if the PM had decided not to address the AJK rallies then the media houses would still have criticized him all the same.

 

[ahsan17]

Someone should explain to this guy that if you start at near the bottom you don’t have much space to fall and recovery to original near bottom is quick.

IK’s obsession with with saying something negative about India reminds me of a few Pakistani posters on this forum

I have no idea what you mean, or if you fathomed this data. If you are near the bottom in this chart, why are you assuming you will rise to near the top? You could stay at the bottom forever depending on how your country dealt with Covid.

 

[Napa]

I have no idea what you mean, or if you fathomed this data. If you are near the bottom in this chart, why are you assuming you will rise to near the top? You could stay at the bottom forever depending on how your country dealt with Covid.

If your (Pakistan's) per cap GDP is $1,168 then it means most of the GDP is for subsistence. There is very little luxury goods and services in there. The pandemic basically has impacted luxury goods and services like eating out at restaurants, vacations etc., rather than subsistence consumption.

The reason Pakistan has bounced back quickly is that luxury goods and services consumption was not there to be lost in the first place. Either that, or Pakistan's economy is way better than the US economy.

No more replies.

 

[ahsan17]

If your (Pakistan's) per cap GDP is $1,168 then it means most of the GDP is for subsistence. There is very little luxury goods and services in there. The pandemic basically has impacted luxury goods and services like eating out at restaurants, vacations etc., rather than subsistence consumption.

The reason Pakistan has bounced back quickly is that luxury goods and services consumption was not there to be lost in the first place. Either that, or Pakistan's economy is way better than the US economy.

No more replies.

How many things is this index measuring? You seem to be focusing on one aspect. What about lockdowns, deaths, flights, etc.

And here we go again with asnine GDP per capita arguments. We have been over the fact that Pakistan's GDP has not been rebased for much longer than India of BD, and that Pakistan likely has a much bigger undocumented economy. People spending a theoretical 1.2k are just living on substinence whereas people spending a theoretical 1.9k in a higher cost of living country were awash in luxury and services, but with more poverty and less urbanization, more wealth inequality, that it dramatically moved their ranking from the top to the bottom. Only you can come up with these asnine theories.

You clearly have no idea how people in Pakistan live btw, based on these ignorant comments. I am sure you are better able to measure spending on luxury goods and services, vacations based on your armchair ideas than people measuring those based on data. Please visit Karachi, Lahore, Islamabad before making these ignorant comments. Please visit northern Pakistan to see how many people vacationed there recently before making these ignorant remarks.

 

[Last Monetarist]

https://www.dawn.com/news/1634040/talks-with-imf-going-smoothly-sbp-chief

State Bank of Pakistan Governor Reza Baqir on Thursday said that negotiations with the International Monetary Fund (IMF) on the 6th review of its $6 billion financial package were going smoothly.

Last month, the IMF also said it was holding open and constructive discussions with Pakistan on the 6th review and stood ready to support the country in achieving its objectives of debt sustainability.

In July 2019, the IMF had approved a 39-month $6bn arrangement for Pakistan under its Extended Fund Facility (EFF) to support Islamabad’s economic reform programme.

Although Mr Baqir, a former IMF official, did not say what was causing the delay, the Fund indicated in a recent statement why the 6th review had not completed yet.

At a June 25 briefing, IMF spokesperson Gerry Rice told journalists that the completion of the review would “require continued discussions on the sustainable fiscal path, structural reforms, particularly on the tax and energy sectors”.

The two sides, he said, were also holding discussion on “social spending enhancements envisaged in the authorities’ reform programme that’s supported by the IMF resources”.

The SBP governor, who spoke to the Pakistani media after introducing Roshan Digital Initiative to a gathering at the embassy, said he could not tell when the 6th review would conclude but he was confident that it would end positively.

“We [the IMF and Pakistan] share the same goals. We too want to expand our tax net and improve our tax-to-GDP ratio,” Mr Baqir added. “We share the same objectives in other sectors too, such as energy and circular debt. The talks are about how to attain these goals.”

The IMF spokesperson, however, had underlined the need for “accelerated implementation of policies and reforms to address some of the longstanding challenges facing the Pakistani economy” while explaining why the talks remained inconclusive. He also said that a recent mission for talks on the sixth review “could not complete these discussions”, adding that the IMF “remains fully engaged” with the Pakistan authorities to conclude the talks.

Neither Mr Baqir nor the IMF official said if the Fund had halted or continued the disbursement during the interim period.

Last month, Pakistan set a target of 4.8 per cent growth in gross domestic product for the financial year 2021-22 and a fiscal deficit target of 6.3pc. The country surpassed growth projections in the financial year 2020-21 despite a third wave of Covid-19 infections, reaching GDP growth of 3.96pc, after a 0.47pc contraction in 2019-20.

Earlier, media reports suggested that the IMF had postponed the sixth review of its programme for Pakistan and the new assessment would take place in September.

In March, the IMF released a tranche of $500 million for Pakistan after approving four pending reviews of the country’s economic progress. The approval revived the $6bn programme after it remained latent for over a year. The IMF programme has an added advantage as it brings endorsements for the country for other lenders.

Responding to a question, Reza Baqir said the threat of Pakistan being placed on the FATF blacklist was no more there. Pakistan, he said, had fulfilled 26 of the 27 conditions needed for removal from the gray list and expressed the hope that the country would successfully meet the remaining condition as well.

 

[MenInG]

A turbulent week at the Pakistan Stock Exchange (PSX) finally came to an end as lack of triggers and limited investor interest took toll on the benchmark KSE-100 index, which fell 123 points or 0.3% to close the week at 47,563.45 during the week ended July 9, 2021.

Trading kicked off Monday on a bearish note. Political tensions following a rally of the Pakistan Democratic Movement (PDM) in Swat after several months coupled with soaring inflation and failing efforts of the government to control price hike added to concerns of investors.

Bears maintained a firm grip in the next two sessions as well in line with the performance of regional equity markets. On Tuesday, the National Command and Operation Centre (NCOC) discussed the re-imposition of stringent standard operating procedures in view of a consistent uptrend in Covid-19 cases over the past one week, which weighed on investors’ mind. Moreover, uncertainty in global equity markets and rising trend in international oil prices allowed bears to maintain control. Contrary to the lacklustre activity observed during the first three trading session, Thursday witnessed a surprise rally of over 800 points.

A positive diplomatic development where the US State Department appreciated Islamabad for its support in matters pertaining to Afghanistan also helped fuel optimism in the market. Moreover, hike in steel, fertiliser and cement prices kept the sectors under limelight, which also acted as a catalyst and helped the index maintain its uptrend during the session.

Unfortunately, the buoyancy did not last and the market dived back to the red zone on the last day of the trading week in the wake of upcoming corporate earnings season.

“Going forward, we expect the market to pick pace next week. The result season is about to commence and we think that cyclical sectors can once again attract limelight on back of robust economic activity,” stated AHL Research in a report.

“Moreover, oil prices have continued to remain downwards sticky with no outcome on the oil output increase, which could spur buying in exploration and production scrips,” the report added. However, it said that fears over the fourth wave of Covid-19 could keep the sentiment cautious.

Average daily traded volume dropped 22% week-on-week to 486 million shares while average daily traded value declined 1% week-on-week to settle at $107 million. In terms of sectors, negative contributions came from oil and gas exploration companies (68 points), tobacco (57 points), refinery (49 points), textile composite (41 points) and food and personal care (36 points). On the other hand, sectors that contributed positively included commercial banks (127 points), fertiliser (50 points), technology and communication (50 points), investment banks/investment companies/securities companies (10 points) and chemical (6 points).

Scrip-wise, negative contributors were Pakistan Tobacco Company (58 points), Unity Foods (39 points), National Refinery (37 points), Pakistan Petroleum (28 points) and Azgard Nine (21 points). On the flip side, major gainers were HBL (88 points), TRG Pakistan (43 points), Meezan Bank (35 points), Engro Fertiliser (31 points), and AGP (26 points).

Foreign selling continued this week clocking-in at $5.2 million compared to a net sell of $8.4 million last week. Major selling was witnessed in all other sectors ($5.4 million) and food sector ($1.1 million). On the local front, buying was reported by companies ($4.1 million) followed by mutual funds ($3.9 million).

Among other major news of the week; World Bank stopped disbursement of a $400 million loan, Pakistan’s power production hit record high at 24,284MW, Pakistan raised $1 billion from Eurobonds, OPEC+ abandoned policy meeting after Saudi-UAE clash, the government raised Rs146b in the latest PIB auction and foreign exchange reserves with the SBP jumped by $1.1b to a multi-year high of $17.2b.

Published in The Express Tribune, July 11th, 2021.

 

[saeedhk]

‘Imran Khan has approved an increase of ONLY Rs 5 in petrol price,’ govt minister.

 

[Gharib Aadmi]

‘Imran Khan has approved an increase of ONLY Rs 5 in petrol price,’ govt minister.

The change was shared by Special Assistant to Prime Minister on Political Affairs (SAPM) Shahbaz Gill, who said that the premier had decided to give the public "huge relief" by not raising prices based on the recommendations of the Oil & Gas Regulatory Authority (​Ogra).

He disclosed that Ogra, in view of rising petroleum prices in the international market over the last few months, had recommended that the price of petrol be increased by Rs11.4 per litre. "Contrary to Ogra's recommendations, the prime minister only approved an increase of Rs5.40 per litre keeping in view public interest," he tweeted.

Honestly he should have just increased it by the price recommended by Ogra. Pakistan cant afford to give this subsidy. They can spend the money on better things.

 

[King_Kohli]

Pakistan ranks top 10 in business environment (report)

BEIJING:
The Annual Report on Investment Security of China's Belt and Road Construction (2021) was jointly released by China Belt and Road Think Tank Cooperation Alliance, Beijing International Studies University, and other institutions.

The report puts forward the fruits of researches on the political, economic, social, cultural, and ecological investment security in countries along the Belt and Road Initiative (BRI).

According to the report, Pakistan has reformed to simplify the process of starting a company and obtaining a construction permit, implementing a series of preferential policies in recent years.

These measures improved its ability to attract foreign investment and strengthened the ease of doing business year by year, making Pakistan one of the world's top 10 economies with the most improved business environment, China Economic Net (CEN) reported.

In terms of political security, the report said that South Asia as a whole is greatly affected by the superpower game.

Read Unparalleled Belt and Road Cooperation

China, the United States, Russia, Japan, and other countries outside the region have historical ties and practical cooperation here, which makes the geopolitical environment of South Asia complicated.

The long-running conflict between India and Pakistan has also intensified pressures on political security in the region, under which the dispute over Kashmir poses a long-standing risk of war.

From the perspective of economic security, Pakistan's economic security scored up by 220% in 2019 compared to 2010, showing an overall trend of growth.

The construction of the China-Pakistan Economic Corridor (CPEC) has greatly boosted public confidence, stimulated domestic demand, and driven production.

However, it is worth noting that since 2019, the accelerated marketisation of the domestic exchange rate in Pakistan has led to market fluctuations, currency devaluation, sustained inflation, forcing the government to raise the benchmark interest rate. Besides, the debt burden increased and the international sovereign rating lowered.

https://tribune.com.pk/story/2312185/pakistan-ranks-top-10-in-business-environment-report

 

[OMB]

ECP issues show-cause notice to PM Imran for ‘not holding’ intra-party polls

The Election Commission of Pakistan (ECP) on Thursday served a show-cause notice on Prime Minister Imran Khan, who is also the chairman of the PTI, for not holding intra-party elections within the stipulated time.

The ECP notice, a copy of which is available with Dawn.com, sought reasons from the PTI chief for not holding intra-party polls due on June 13, 2021.

Under the Elections Act, 2017, all political parties are required to hold intra-party elections on time.

“… in terms of Section 215 (4) of the Elections Act, 2017, you are required to show cause as to why your party may not be declared ineligible to obtain an election symbol for upcoming Election (s),” the ECP notice to the premier reads.

The ECP also sought a response from the prime minister within 14 days, warning that the election commission "shall take further action under the law" if the notice was not responded to.

The election commission said a political party was required to submit a certificate signed by an office-bearer of the party, assuring that the polls were held in accordance with the constitution of the political party and the Elections Act.

However, the [PTI] failed to provide the certificate with regard to the conduct of intra-party elections due on June 13, 2021 as required under legal requirements, said the ECP.

It also highlighted that a political party enlisted under the Elections Act shall be eligible to obtain an election symbol for contesting elections for parliament, provincial assemblies or local government after the submission of the certificate of intra-party elections.

https://www.dawn.com/news/1637600/ecp-issues-show-cause-notice-to-pm-imran-for-not-holding-intra-party-polls

 

[cric_man]

IMF revises up Pakistan’s real GDP growth rate to 3.9%
Reports says projections are revised up for the MEast and CAsia due to robust activity in some countries

APP
July 28, 2021

ISLAMABAD:
The International Monetary Fund (IMF) on Tuesday revised up its projection for Pakistan's real Gross Domestic Product (GDP) growth rate to 3.9%.

In its World Economic Outlook report 2021 (update), the IMF said, "Projections are revised up for the Middle East and Central Asia due to robust activity in some countries (such as …Pakistan)”.

Read: Pakistan’s public debt to GDP remained broadly unchanged: IMF

Earlier in April this year, the IMF had projected Pakistan's real GDP to grow at 1.5% in the year 2021 despite a higher projected rate of 3.0% by the State Bank of Pakistan (SBP).

Pakistan’s government had already released the provisional data of GDP growth rate (3.9%) for the year 2020-21 backed by robust industrial growth and higher than expected agriculture output.

The SBP on Tuesday forecast the GDP growth to rise from 3.9% in FY21 to 4-5% this year, and average inflation to moderate to 7-9% from its recent higher out-turns.

Meanwhile, the IMF in its statement said economic prospects have diverged further across countries since the April 2021 World Economic Outlook (WEO) forecast.

Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs: those that can look forward to further normalization of activity later this year (almost all advanced economies) and those that will still face resurgent infections and rising Covid death tolls, it added.

The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere.


The global economy is projected to grow 6.0 percent in 2021 and 4.9 percent in 2022.The 2021 global forecast is unchanged from the April 2021 WEO, but with offsetting revisions. Prospects for emerging market and developing economies have been marked down for 2021, especially for Emerging Asia.

By contrast, the forecast for advanced economies is revised up. These revisions reflect pandemic developments and changes in policy support. The 0.5 percentage-point upgrade for 2022 derives largely from the forecast upgrade for advanced economies, particularly the United States, reflecting the anticipated legislation of additional fiscal support in the second half of 2021 and improved health metrics more broadly across the group.

https://tribune.com.pk/story/2312600/imf-revises-up-pakistans-real-gdp-growth-rate-to-39

 

[MenInG]

Pakistani authorities have estimated $87.3 billion worth of debt and non-debt creating external inflows in the current fiscal year on the basis of some unrealistic assumptions amid the State Bank of Pakistan’s (SBP) worries over a possible drop in foreign remittances.

The $87.3 billion estimate of foreign inflows during fiscal year 2021-22 is based on the assumption that the International Monetary Fund (IMF) programme would continue that has again been derailed after remaining active for just a couple of months.

Finance Minister Shaukat Tarin on Thursday chaired a meeting to review the status of foreign inflows that the country needs to service its debt and meet international payment obligations, sources told The Express Tribune.

The session was the follow-up of a meeting that Prime Minister Imran Khan had chaired on July 2 to review the country’s foreign inflow situation amid the premier’s reluctance to accept some of the harsh IMF conditions.

However, Thursday’s meeting also ended inconclusively, as the finance ministry did not know the actual outflow in the shape of payments against imports, foreign loans and repatriation of profits.

Tarin was unhappy over the presentation and sought more information in the next meeting, said the sources. He also gave directives for providing month-wise status of projected foreign inflows and outflows.

Based on the input from the SBP, Board of Investment, finance ministry, economic affairs ministry and Ministry of Commerce, the inflows have been estimated at $87.3 billion during the ongoing fiscal year. These included $41.4 billion in inflows during the first half of current fiscal year, said the sources.

However, the numbers appeared on the higher side as Pakistani authorities showed a 7.3% to 43% increase in inflows under various categories, said the sources.

Remittances have been projected at $31.3 billion during this fiscal year - a growth of 7.8% over the last fiscal year. Sources said that the SBP informed the finance minister that it feared a dent in foreign remittances as the number of new workers going abroad had dropped drastically.

Tarin gave directives for studying the reasons behind the $29.3 billion worth of remittances in the last fiscal year, particularly the positive impact of restriction on overseas air travel and contingent measures by the Financial Action Task Force, said the sources.

The SBP sought approval of the finance minister for a prize scheme to encourage foreign remittances, which Tarin agreed to, said the sources.

The central bank is already playing a gamble by offering up to 7% interest rate on the Roshan Digital Account. Prime Minister Imran Khan, who was once against taking foreign loans, now proudly owns this kind of expensive foreign borrowing by Pakistan.

Sources said that the Board of Investment projected the foreign direct investment at $2.65 billion in this fiscal year, which was higher by 43% or $800 million over last year. This projection is being made at a time when foreign investment is drying up due to the government’s preferential investment policies and a hostile bureaucracy.

Foreign loans have been projected at $14.1 billion for this fiscal year, excluding any disbursements by the IMF, said the sources.

The Ministry of Commerce has estimated exports of goods at $31.6 billion, higher by $5.3 billion or 20.7%, said the sources. Similarly, exports of services have been shown at $8 billion, up by $2.1 billion or 26.2%, said the sources.

But nobody shared the imports of goods and services figures, which would have highlighted the gross external financing needs of the country.

Against the IMF projection of over $23 billion in gross external financing requirements for this fiscal year, the central bank in its Monetary Policy Statement stated that “with the contained current account deficit and healthy commercial, official, portfolio and FDI inflows, Pakistan’s external financing needs of around $20 billion are expected to be more than fully met.”

The Monetary Policy Committee (MPC) also noted that the market-based flexible exchange rate system, resilience in remittances, an improving outlook for exports and appropriate macroeconomic policy settings should help contain the current account deficit in a sustainable range of 2-3% of GDP in fiscal year 2021-22.

This new current account deficit figure is three to four times higher than the 0.7% of GDP that the government has used in its budget documents hardly a month ago, exposing the credibility and trustworthiness of the official planning and numbers.

 

[King_Kohli]

Alarm bells ringing as trade deficit hits $3.058bn in July

ISLAMABAD: The government’s battle against bloated trade deficit is reversing as it widened 81.4 per cent in the first month of the current fiscal year (FY22), driven largely by almost double increase in imports compared to exports from the country.

Merchandise trade deficit reached $3.058 billion in July this year against $1.686bn over the corresponding month last year, according to data shared by the Ministry of Commerce on Monday.

Trade deficit reached an all-time high of $37.7bn in FY18. However, the government’s measures led to a drop in trade deficit to $31.8bn in FY19 and $23.183bn in FY20. The trend reversed and trade deficit was recorded at $30.796bn in FY21.

PM’s aide says government has set $38.7bn export target for FY22

Trade gap has been widening since December 2020, mainly led by exponential growth in imports and comparatively slow growth in exports.

The import bill in July this year went up 46.6pc to $5.405bn against $3.687bn over the corresponding month last year. In the outgoing fiscal year (FY21), the import bill surged by 25.8pc to $56.091bn from $44.574bn the previous year. On a month-on-month basis, the import bill increased by 10.69pc.

The import bill is also rising mainly due to increased imports of petroleum, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines. The growth in remittances at the moment will be sufficient to finance the import bill.

Exports posted a growth year-on-year by 17.3pc to $2.347bn in July 2021 against $2.001bn over the corresponding month last year. On a month-on-month basis, exports of merchandise dipped by 13.64pc. Export proceeds went up 18.2pc to $25.294bn in FY21 from $21.394bn over the last year.

Adviser to the Prime Minister on Commerce Razak Dawood has said the government sets an export target of $38.7bn for the current fiscal year.

Addressing a press conference along with PM’s special assistant Shahbaz Gill here on Monday, he said exports had touched the highest-ever mark of over $25bn in FY21.

Mr Dawood said the export target of commodities for FY21 was $25.3bn and that of services was $6bn. He said the highest-ever export of IT services was recorded in the outgoing fiscal year, which grew by 47pc to $2bn.

For the current fiscal year, he said the commerce ministry projected $31.2bn worth of goods and $7.5bn of services exports.

Mr Dawood said the government was focusing on the export-oriented policy, besides pursuing a policy of “Make in Pakistan” to encourage the local industry and make locally produced goods internationally compatible for exports.

https://www.dawn.com/news/1638482/alarm-bells-ringing-as-trade-deficit-hits-3058bn-in-july

 

[Napa]

Alarm bells ringing as trade deficit hits $3.058bn in July

ISLAMABAD: The government’s battle against bloated trade deficit is reversing as it widened 81.4 per cent in the first month of the current fiscal year (FY22), driven largely by almost double increase in imports compared to exports from the country.

Merchandise trade deficit reached $3.058 billion in July this year against $1.686bn over the corresponding month last year, according to data shared by the Ministry of Commerce on Monday.

Trade deficit reached an all-time high of $37.7bn in FY18. However, the government’s measures led to a drop in trade deficit to $31.8bn in FY19 and $23.183bn in FY20. The trend reversed and trade deficit was recorded at $30.796bn in FY21.

PM’s aide says government has set $38.7bn export target for FY22

Trade gap has been widening since December 2020, mainly led by exponential growth in imports and comparatively slow growth in exports.

The import bill in July this year went up 46.6pc to $5.405bn against $3.687bn over the corresponding month last year. In the outgoing fiscal year (FY21), the import bill surged by 25.8pc to $56.091bn from $44.574bn the previous year. On a month-on-month basis, the import bill increased by 10.69pc.

The import bill is also rising mainly due to increased imports of petroleum, soybean, machinery, raw material and chemicals, mobile phones, fertilisers, tyres and antibiotics and vaccines. The growth in remittances at the moment will be sufficient to finance the import bill.

Exports posted a growth year-on-year by 17.3pc to $2.347bn in July 2021 against $2.001bn over the corresponding month last year. On a month-on-month basis, exports of merchandise dipped by 13.64pc. Export proceeds went up 18.2pc to $25.294bn in FY21 from $21.394bn over the last year.

Adviser to the Prime Minister on Commerce Razak Dawood has said the government sets an export target of $38.7bn for the current fiscal year.

Addressing a press conference along with PM’s special assistant Shahbaz Gill here on Monday, he said exports had touched the highest-ever mark of over $25bn in FY21.

Mr Dawood said the export target of commodities for FY21 was $25.3bn and that of services was $6bn. He said the highest-ever export of IT services was recorded in the outgoing fiscal year, which grew by 47pc to $2bn.

For the current fiscal year, he said the commerce ministry projected $31.2bn worth of goods and $7.5bn of services exports.

Mr Dawood said the government was focusing on the export-oriented policy, besides pursuing a policy of “Make in Pakistan” to encourage the local industry and make locally produced goods internationally compatible for exports.

https://www.dawn.com/news/1638482/alarm-bells-ringing-as-trade-deficit-hits-3058bn-in-july

The devaluation of the PKR 3 years ago suppressed imports and gave exporters a competitive advantage. It also encouraged remittances from expat Pakistanis as the purchasing power of their remittances was higher. All these led to an improvement in Pakistan's balance of payments.

However, differential inflation erodes these advantages over time unless the currency keeps devaluing to keep pace. For example, if US inflation is 3% and Pakistani inflation is 10%, then the PKR has to devalue at approximately 7% vs. the USD for imports from the US to not become relatively cheaper.

The PKR has not devalued to keep pace with Pakistan's higher inflation rate compared to the countries it imports from, hence we are seeing an increase in imports.

Longer term Pakistan needs to develop modern export industries.

Given the amount of dumb responses I have been getting lately, I will say it right now, no replies unless I see something intelligent

 

[MenInG]

ISLAMABAD:The government is set to launch the largest ever Rs1.6 trillion worth Kamyab Pakistan Programme (KPP) – an initiative to give interest-free and subsidised loans to lowest income groups – amid bureaucracy’s advice to exercise caution and make the programme more transparent.

The government is expected to launch the programme on Monday that appears surprising as neither the Ministry of Finance nor the partner banks have got access to the “backbone” of the programme – the data.

The data is being collected under the National Socio Economic Registry (NSER), sources told The Express Tribune. In fact, the NSER data compilation and validation by Nadra will be done by end September, sources in the Poverty Alleviation and Social Safety Division, which is the custodian of the data, revealed.

If executed successfully and transparently, the programme can help 30 million families to improve their living standards by increasing their earnings.

The finance ministry and other government departments have advised the political leadership to exercise caution and conduct due diligence on the cost, service charges being paid to partner banks and microfinance institutions that will disburse these loans and the beneficiaries, sources said.

The finance ministry has conveyed its observations to the political leadership and urged it to follow them to avoid trouble in the hands of the National Accountability Bureau, sources added.

The bureaucracy, being afraid of the anti-corruption watchdog, wanted that the initiative should be launched only after thoroughly reviewing its all aspects, as it also involves about Rs260 billion subsidies over a period of three years, sources further said.

Finance Minister Shaukat Tarin has taken multiple meetings after assuming office on Monday, including the one held on Thursday with all the stakeholders.

Even on Thursday, Special Assistant to the Prime Minister on Poverty Alleviation Dr Sania Nishtar stated in the meeting that the finance ministry did not contact her about getting access to NSER database, sources maintained. Dr Sania was not available for comments.

According to sources, the finance minister had inquired from the finance secretary when the ministry contacted the Social Safety Division to get access to the data.

“The Finance Division has been engaged with BISP/Ehsaas to understand the nature and structure of the Ehsaas NSER data for the past couple of weeks or so,” Finance Secretary Yousaf Khan said while responding to queries sent by The Express Tribune.

He stated that since the work on the Kamyab Pakistan Programme began, there had been numerous meetings and discussions in this respect.

“In fact, right from the outset, it was an understanding that NSER data would be the backbone of KPP,” said Khan, adding that the engagement on Thursday was merely on the finer details and arrangements of sharing the data in a safe and secure manner, electronically, with the executing agencies of the KPP.

The NSER survey remained incomplete and Nadra has not yet validated the data of the beneficiaries, sources noted. The NSER will be ready for use by September, they added.

The programme is designed to give loans to 30 million beneficiaries who would be selected on the basis of NSER scores – called Proxy Means Test (PMT).

The targeted PMT score is from 29 (4.5 million beneficiaries) to 40 (30 million beneficiaries) for disbursing Rs1.6 trillion loans in three years.

Sources said that the Poverty Alleviation Division has data of only up to 29 PMT score and the rest of the data will be available by September. However, the political leadership was desperate to launch the programme and was not willing to wait till September.

There were also issues about bringing transparency in selection of partner microfinance banks, commercial banks, guarantees being extended to these partner institutions and the cost being paid to them, according to the sources.

As per the design, the central bank would provide money to the commercial banks and banks then would give it to the microfinance banks.

According to the proposal, the central bank would provide money to the banks at Karachi Interbank Offered Rate (Kibor) plus 0.5% rate and would extend 100% guarantees against the losses. However, the finance ministry objected to giving 100% guarantees.

Sources maintained that the microfinance banks would be paid 8% service charges and would be given guarantees to pick 10% of the losses.

Initially, the idea was to pay 3% service charges since the money was interest-free, as Akhuwat was already taking 5% charges. But surprisingly the rate went up to 8%.

It was said that there was also a proposal to give 10% service charges but the finance secretary put his feet down. The government has also been advised to pick the partner institutes through competitive bidding.

In the first year, the government plans to disburse Rs315 billion that will involve Rs21 billion subsidies.

In the second year, the target is around Rs500 billion loans involving Rs75 billion subsidies and in the third year, which will be the first year of a new government, Rs785 billion will be disbursed involving Rs161 billion subsidies, sources observed.

Prime Minister Imran Khan wants to give micro-loans to entrepreneurs, businessmen and farmers at 0% markup without collateral. The key focus is to provide loans to 4.5 million households at the lowest strata, registered with the NSER.

The programme is part of the PM’s vision of bottom-up approach under which people at the lowest end would be given access to money.

Under Kamyab Kissan component, agricultural loans will be given to farmers with landholding up to 12.5 acres and loan size of Rs150,000 (per crop) for procurement of agricultural inputs. In addition, loans upto Rs200,000 would be given for machinery and equipment.

Under second component of Kamyab Karobar, Rs500,000 loans will be given for small business and start-ups in both rural and urban areas for three years.

Under the third component of Naya Pakistan low-cost Housing loans, up to Rs2 million loans will be given for non Naya-Pakistan Housing and Development Authority and Rs2.7 million for NAPHDA projects for 20 years on up to 5% interest rates.

The loans will be given to families with cumulative average monthly income of less than Rs50,000.

 

[MenInG]

Prime Minister Imran Khan has asked his economic team to check the increase in the import of non-essential goods, including that of vehicles, as his government might face a challenge of an unmanageable current account deficit because of a projected record of $70 billion in imports this fiscal year.

On Tuesday, PM Imran was briefed on the month-wise status of foreign inflows and outflows.

The discussion largely remained focused on the trade figures, which were “not very healthy” in the first month of the fiscal year, at least two participants of the meeting told The Express Tribune.

Both the net foreign direct investment and exports fell short of the government’s estimates for July but the imports were higher than its projections, they added.

Overall, the premier expressed his satisfaction with the increase in the import of plants and machinery, but he asked the finance ministry and the State Bank to remain vigilant because of the surge.

Finance Minister Shaukat Tarin has taken the responsibility to ensure monitoring of all external inflows and outflows related indicators, the sources said.

The finance ministry has estimated about $90 billion outflows in this fiscal year but it also hopes to achieve $88 billion inflows, which include the $1.8 billion highly expensive loans under the Naya Pakistan Certificates scheme.

The $88 billion inflows include $14.2 billion foreign loans, excluding that from the International Monetary Fund (IMF).

There was a discussion as to whether or not the government should increase duties and taxes to check the import of non-essential goods but no final decision had been made, the sources said.

The imposition of the regulatory duties, additional customs duties, and non-tariff barriers were commonly used tools by the central bank and the federal government to discourage imports during the first two years of the PTI government.

The premier inquired as to why the import of vehicles was increasing. His adviser on commerce replied that its share in the overall imports was not very high, the sources added.

In July, the country imported 1,446 sports utility vehicles valuing Rs3 billion.

The Federal Board of Revenue (FBR) also received Rs4.3 billion in taxes on the import of these vehicles in a single month, according to official statistics.

The meeting was held three days after SBP Governor Dr Reza Baqir told the media that the current account deficit should be “talked about with happiness”.

“The current account deficit would be between 2% to 3% of the GDP in this fiscal year, which means roughly $6.5 billion to $9.5 billion,” he added.

The central bank was of the view that the import of machinery and plants would help increase exports in the longer run.

Pakistan’s trade deficit widened 85.5% to $3.1 billion in July. The imports increased by 48% to $5.4 billion, which became a cause of concern.

In comparison, exports increased only 16.4% to $2.3 billion in July 2021 as against $2 billion in the same month of the last year.

The commerce ministry informed the prime minister that it hoped that exports would pick up in the coming months on the back of additional incentives given to exporters.

The country did not have a current account deficit problem as long as it did not allow the economy to grow by keeping interest rates high, devaluing the rupee, and making fiscal adjustments.

The central bank has slightly upward adjusted its projection of imports to $64 billion in the current fiscal year against $70 billion estimates by the commerce ministry.

This discussion about external trade statistics is taking place within a month of the approval of the budget.

Against a range of $6.5 billion to $9.5 billion estimated by the SBP, the finance ministry was projecting over a $13 billion current account deficit -- almost equal to the one recorded by the PTI government in its first year in power.

The PML-N government had left behind a $19 billion current account deficit that was equal to 6% of the GDP and a reason for Pakistan to seek the IMF loan.

Similarly, there are also differences of opinion between the commerce ministry and the SBP on the export data. The central bank projected $27 billion worth of exports in the current fiscal year while the commerce ministry placed it above $30 billion.

The sources said the projected net foreign direct investment figure of $2.65 billion also appeared on the higher side, given the trend in the first month.

The State Bank’s latest data issued showed that the country received only $90 million in foreign direct investment during July -- down by 30% over the same month of the previous fiscal year.

A key reason behind the 30% drop in net direct investment was a 116% increase in outflows that reached $86.4 million last month.

The premier asked the Board of Investment to approach expatriates for new investment in the country.

The expatriates have so far helped the government by giving loans through Roshan Digital Accounts.

This month, the finance ministry also approved a subsidy of Rs13.1 billion for retaining the foreign remittances that are estimated over $31 billion as part of the $88 billion inflows.

Express Tribune

 

[Colorblind Genius]

Some early signs are good but could be a simple market reaction; long way to go for PTI in this respect

=====


KARACHI: In an interesting and surprising development, the currency has appreciated on Friday to Rs127.86 against the US dollar in the inter-bank market, according to the State Bank of Pakistan (SBP).

It has recovered around 0.5% in the last three days, strengthening from Rs128.50 to the greenback on Monday.

The development comes after the rupee shed around 22% since December 2017 as the country’s current account deficit widened to a historic high, taking down gross foreign currency reserves to the alarming level of $9.01 billion.

Rupee weakens to record low as dollar flow slows down

However, on Friday, the rupee appreciated, inviting panic selling and nominal buying in the open market as well. The currency recovered 1.5% to hover around the Rs127-mark to the US dollar, currency dealers said.

“There are strong rumours that the inter-bank market would further strengthen rupee by (another) Rs1.5 to Rs2 on Monday,” a dealer at Habib Qatar International Exchange Pakistan told The Express Tribune.

“Dollar (trade) closed at Rs127 against Rs129 (on Thursday),” he added.

The downward movement in rupee comes in contrast to widespread talks that the rupee could weaken further even after losing 22%.

“There was an absence of buyers (of dollars) in the (open) market … however, the drop is expected to be short-lived,” a currency dealer at the Dollareast Exchange Company told The Express Tribune.

Pakistan Forex Association President Malik Bostan said the drop should be seen in the backdrop of SBP’s move to halt the inter-city physical movement of dollars.

Foreign exchange: SBP’s reserves drop by another $53m, stand at $9.01b

The SBP notification, issued several days ago, binds dealers to transfer dollars only through proper banking channels with effect from Tuesday (July 24). It also says that if it finds physical movement of the foreign currency it would seize it, Bostan added.

Many dealers move dollars via air and/or roads traveling from head offices to branch offices nationwide or vice-versa.

“The ruling has broken the backbone of illegal dollar traders,” Bostan said, elaborating this has massively increased supply of dollars to the legal dealers and helped them appreciate the rupee.

Exchange Companies Association of Pakistan (ECAP) General Secretary Zafar Paracha said the rupee has recovered in the open market after currency smuggling came to a complete halt in the last few days.

He said the caretaker government adopted a stricter stance in the movement of people on borders with Afghanistan and Iran to avoid any untoward law and order situation during the general elections held on Wednesday (July 25). Only those people with complete travelling documents were allowed to pass through the borders.

As hinted earlier, rupee dives to Rs123 to US dollar

Interestingly, The Express Tribune has also reported that China has agreed to immediately give a $2-billion loan to Pakistan, aimed at stabilising fast-depleting official foreign currency reserves and providing much-needed breathing space to the new government. The cushion eases the pressure on the Pakistani currency that suffered due to a widening current account deficit that reached a peak of $17.99 billion during fiscal year 2018.


https://tribune.com.pk/story/1767878/2-rupee-appreciates-us-dollar-open-inter-bank-markets/

Economic situation is getting worse for the general public when you look at the inflation spike globally.

USA printed 27 BILLION DOLLARS A DAY in 2020 to hand out those stimulus checks. Trillions of extra dollars were printed.

And this has caused a global havoc because the world economy is based on dollar.

There is now A LOT more dollars in the international market chasing the same amount of commodities.

And sky rocketing inflation is a natural outcome.

Tough times ahead for all the third world countries and their population.

 

[MenInG]

In spite of significantly increasing electricity prices, the circular debt has almost doubled within three years to Rs2.28 trillion due to the government’s failure to stem systemic losses, an energy ministry report showed.

The ministry submitted the final circular debt report for fiscal year 2020-21 that ended in June before the Cabinet Committee on Energy (CCoE), which met on Friday.

The report showed that the power sector’s circular debt remained at Rs2.280 trillion, which is slightly less than the earlier provisional estimates of over Rs2.3 trillion.

When the Pakistan Tehreek-e-Insaf (PTI) came to power, the circular debt was Rs1.148 trillion that has doubled within three years.

The ruling PTI had promised to bring the circular debt to zero by December 2020 but the numbers showed that there was an increase in both the flow and stock of the circular debt compared with June 2018.

The circular debt piles up due to gap between the cost of electricity generation, transmission and distribution and actual money collected on account of bills including increase in tariffs and payment of subsidies.

The government added Rs404 billion to the flow of circular debt in the last fiscal year due to less provision of subsidies against commitments, increased cost of inefficiencies, interest on debt parked in a holding company and less recovery of bills, documents of the energy ministry showed.

However, the government report showed that the net increase in the circular debt was Rs130 billion in fiscal year 2020-21 after adjusting increase in electricity prices and reduction in the stock of the debt.

The government has been making efforts to improve efficiency but the power sector situation remains grim despite putting an additional burden of over Rs150 billion on consumers in the past one year by increasing electricity prices, the summary showed.

In its first year, the PTI added Rs464 billion in the circular debt and in the second year another Rs538 billion were added and now after adjusting subsidies and increase in tariffs the net addition was Rs130 billion in the third year. The Rs130 billion figure was not telling the complete picture.

The government paid Rs90 billion to independent power producers (IPPs) and another Rs77 billion reduction was shown on account of retirement of Power Holding Limited debt.

There was Rs207 billion or 20% increase in the flow of the circular debt, as the payables to the power producers jumped from Rs1.04 trillion to Rs1.3 trillion, according to the report. But the stock has been reduced by 7.6% to Rs930 billion –a reduction of Rs77 billion.

Rs404b debt break-up

In fiscal year 2020-21, the government provided Rs72 billion less in subsidies as against the requirements that then became part of the circular debt, according to the summary. There was an increase of Rs57 billion on account of unpaid subsidies and another Rs15 billion due to unbudgeted subsidies. The government did not pay Rs27 billion AJK subsidies and another Rs6 billion of the K-Electric consumer subsidies despite making commitments.

The government added another Rs75 billion in the circular debt on account of interest payments to the IPPs on delayed payments, which were 36% higher than the preceding year, according to the summary.

Similarly, another amount of Rs30 billion was added on account of interest paid on the Power Holding Limited loans, which were 57% less than the previous year. This is despite the fact the consumers are also paying debt servicing surcharge through their monthly bills.

There was an improvement of 81% under one head - and it is passing on the generation cost to the end consumers. As against the preceding year’s Rs270 billion, in the just ended fiscal year Rs51 billion was added under this head, which suggest significant price increase.

An amount of Rs82 billion was also added in the circular debt due to non-payment by K-Electric. The power distribution companies’ uncontrolled losses added another Rs67 billion in the circular debt - up by 59% over the preceding year. This shows that the PTI government has failed in bringing improvement in governance of these power distribution companies, nor it could privatised them.

The government showed 157% improvement in recoveries but still added Rs27 billion in the circular debt due to less than targeted recoveries by the power distribution companies. A key reason behind improvement was Rs31 billion recoveries on account of installments of the bills related to Covid-19 period.

The government has recently prepared a plan to reduce the circular debt but the new plan, drawn up in consultation with the International Monetary Fund (IMF), shows that the circular debt reduction will largely hinge up increasing the electricity prices.

There was a reduction of Rs108 billion in the flow of the circular debt by increasing electricity tariffs pertaining to the previous years.

A planning ministry handed stated that CCoE noted that the circular debt build-up had substantially reduced in comparison to the previous year. “The committee appreciated the improvement in the recoveries and directed Power Division to continue with its efforts for reduction of circular debt,” it added.

 

[OMB]

<blockquote class="twitter-tweet"><p lang="en" dir="ltr">More good news on econ front. OICCI's BCI Survey shows Pak standing at positive score of 9%, an improvement of 59% from -50% score of May '20. OICCI mbrs confidence stands at +34% vs -74% in 2020, a turnaround of 108%. Dramatic rise in confidence of business esp foreign investors <a href="https://t.co/Sw1cT3BK8p">pic.twitter.com/Sw1cT3BK8p</a></p>— Imran Khan (@ImranKhanPTI) <a href="https://twitter.com/ImranKhanPTI/status/1429755636384997377?ref_src=twsrc%5Etfw">August 23, 2021</a></blockquote> <script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>

 

[MenInG]

In an anticipated move, the government on Tuesday made yet another change in its core economic team by giving an exit to Dr Waqar Masood Khan, an aide to the prime minister on finance, and also removed Federal Board of Revenue Chairman Asim Ahmad.

Dr Mohammad Ashfaq Ahmad, a Grade 21 officer of the Inland Revenue Service, has been made the new FBR chairman –the seventh by the government of Prime Minister Imran Khan in three years.

On an average, each chairperson remained just five months and 15 days in office.

There are also chances that Finance Secretary Yousaf Khan could also be transferred, the sources said. Yousaf Khan had been brought in by Dr Waqar. Some other changes in the Finance Division and FBR are also expected.

Dr Waqar, who remained in office for less than 10 months, opted to bow out after he could not develop sustainable working relationship with Finance Minister Shaukat Tarin despite taking a good start four months ago, sources told The Express Tribune.

Dr Waqar has resigned as special assistant to the PM on finance and revenue, sources close to him confirmed. They said that the premier has accepted the resignation.

Dr Waqar, a veteran bureaucrat, had been brought in the PM’s economic team in October last year. He had promised the prime minister to broaden the tax base and increase the tax collection –the two objectives that largely remained unfulfilled.

The government removed the FBR chairman for his mishandling the most successful cyberattack on the country’s biggest data centre, from which the FBR still could not fully recover even after 10 days.

Read More: Tarin mulls options on FBR hack

The Express Tribune had revealed that the FBR’s data centres had been hacked but the FBR tried to cover up the most devastating cyberattack.

Ahmad has been removed due to his mishandling of the cyberattack, the finance minister said while talking to The Express Tribune.

The minister said that the outgoing chairman should have taken the matter more seriously as he had also remained a member information technology of the FBR.

The finance minister was kept in the dark about the attack and the damage it caused for about 48 hours. The minister came to know from the story of The Express Tribune that appeared on August 15.

Tarin said that a few members of the FBR would also be changed but it would be the choice of the new FBR chairman to select his team members.

The sources said fingers are also pointed at chief executive officer of Pakistan Revenue Automation Limited (PRAL), its board chairman and chief information officer for their mishandling of issues.

To a question, the finance minister said that the system has not yet been fully restored and so far only 90% of the recovery was made. The minister had another meeting in the FBR on Tuesday to discuss the hacking issue.

Tarin said that the FBR could not utilise the $80 million loan to upgrade its obsolete network.

The Express Tribune had also reported that despite knowing that its information technology equipment is obsolete and some of its software is outdated, the FBR did not make any serious effort to upgrade them, which resulted in hacking of the data centres.

The systems were not improved even though the World Bank approved $80 million loan two years ago to upgrade what it called “end-of-life equipment” and “legacy branded software”.

Tarin said that if there were obstacles in using the WB loan, the FBR should have taken money from the finance ministry and upgraded the system.

The FBR people were of the view that they enhanced monitoring of the data systems after receiving a warning from the premier intelligence agency. They said that unlike the past, this time it was a file-less attack, therefore, people could not detect the attack.

“Within the existing software and hardware, we would not have done more than this,” a top FBR functionary said on condition of anonymity while explaining reasons behind the FBR to stop the attack.

Dr Ashfaq is the seventh FBR chairman who faces the task of achieving this year’s annual revenue collection target of Rs5.829 trillion and increasing the narrow tax base of only three million return filers.

“The annual tax collection target will be achieved at any cost,” Dr Ashfaq said while talking to The Express Tribune. He has to his credit collecting Rs4.735 trillion in taxes in the last fiscal year –better than expectations of many.

“My strategy of not taking income tax advances and not blocking the taxpayers’ genuine refunds would continue,” the new chairman FBR said. The FBR would not spare those who owe money to it and would not block the money that belong to the taxpayers, Dr Ashfaq said.

The new chairman said that implementation of the track and trace system and expanding the net of point of sale to connect the retailers with the FBR system will be his topmost priorities. All these changes will be made in the next three to four months.

Dr Ashfaq’s other challenge will be to effectively utilise the information received from the Organisation for Economic Cooperation and Development and ensure full recoveries of the due taxes.

 

[MenInG]

ISLAMABAD: Prime Minister Imran Khan said on Thursday the first three years of the Pakistan Tehreek-e-Insaf (PTI) very difficult but stressed the national economy was put on right track despite various challenges, including the global coronavirus pandemic.

Addressing a ceremony at the Convention Centre in connection with the launching of the three-year performance of the PTI government, Imran thanked the army for support and mentioned the helping hand lent by friends of the country, Saudi Arabia, United Arab Emirates (UAE) and China.

Imran touched various topics in his wide-ranging speech, including the corruption of the past rulers and his plans for the futures, dotted with light moments such as the singing skills of Sindh governor Imran Ismail.

He said that opposition, which brought the country to a near bankruptcy in 2018, wanted that the army bring down his government. He added that “mafia” was giving speeches against the military but “special thanks to the Pakistan army for dealing with the difficulties”.

“It was difficult time, when I became the prime minister but I said there is no need to panic. Highs and lows are part of life, which means that we shouldn't be afraid of bad times, that is the way to become successful in life,” the prime minister told the audience, amid playing of PTI songs.

“When we took over the government, we didn't have the money to pay off the debt. If Saudi Arabia and China did not help us then, we would have faced a lot of difficulties. The value of our rupee fell further and we were forced to go to the IMF due to lack of money,” he added.

Also read: Peaceful Afghanistan vital for Pakistan and regional stability, Imran tells Putin

A year later, Imran said, when the country was about to get out of a difficult times the coronavirus pandemic struck the country. However, he added that the government handled the situation well, a received the praise from the World Health Organisation (WHO).

In 2018, the prime minister said, the current accounts deficit had soared to $20 billion, which the present government brought to $1.8 billion. He mentioned that during that period the government initiated the process for building 10 dams and introduced single national curriculum.

Accountability

The prime minister said that youth of the country were the future of the nation. He also praised the overseas Pakistan, saying: “The biggest asset of our country is the Pakistanis living abroad, who are sending remittances from abroad.”

Imran said that $1,000 billion was stolen from poor countries and transferred to offshore accounts every year. “The country is destroyed when its prime minister and ministers start stealing. The rule of law is when the law is the same for everyone,” he added.

Continuing, he said that in 8 to 10 years of the Pakistan Muslim League-Nawaz (PML-N) government in Punjab, the provincial anti-corruption department recovered only Rs2.5 billion but in contrast, “during our three years, Rs450 billion was recovered in Punjab alone” from the corrupt.

Speaking about the government’s social sector initiatives, Imran mentioned that his government made efforts to ensure that women get a share in the property. “That is why; we started issuing inheritance certificates through NADRA [National Database and Registration Authority.”

Brave Afghans

During his speech, the prime minister also highlighted the ongoing situation in Afghanistan in the context of Pakistan’s foreign policy. He said that in the future, Pakistan would not allow the use of its soil against anyone.

“We allowed use of our land [in the US-led war in Afghanistan]. We sacrificed lives of 70,000 of our people. Our people were killed, our economy was destroyed, yet still we are being accused of the failure of the US in Afghanistan,” he said.

“America became our ally yet kept bombing us. America carried out 480 drone strikes in our country. The heirs of those killed in the drone strikes were, seeking revenge from the Pakistani government,” he continued. “We have decided not to allow the use of our land in the future.”

Imran said that the Afghan nation was a brave and fighting nation, adding that before the US the former Soviet Union also failed to occupy the country. In the current situation, he stressed the need for believing in the Taliban and “if the Taliban do not stick to their word, it will be seen at that time”.

“For the time being,” the prime minister repeated his call for the whole world to “must work for peace in Afghanistan”. Imran said that Europe “is only concerned about women in Afghanistan” but asked: “Has anyone ever come from abroad to give rights to women in a country?”

Earlier, the prime minister began his speech by welcoming "all our chief ministers, governors and the leaders of AJK [Azad Jammu and Kashmir]”. He also commended Sindh Governor Imran Ismail for singing the famous ‘Tabdeeli’ song.

Imran Khan recalled that Sindh Governor Imran Ismail, folk singer Attaullah Esakhailvi, Ibrarul Haq and many others played an important role in taking forward PTI. He also thanked the government allies, including PML-Quaid, Muttahida Qaumi Movement and Grand Democratic Alliance for extending support to the PTI government during the last three years.

Before the speech, Information Minister Fawad Chaudhry presented the PTI government’s three-year performance report to the prime minister. The report highlights the efforts and key achievements of the government for benefitting the people in line with the vision of Naya Pakistan.

The 251-page Report 2018-21, compiled by the Information Ministry, outlines the achievements of 44 public bodies, besides defining the baseline of each sector. It also focuses on key objectives, updates on initiatives, long-term strategies, legislative policy and the projects in the pipeline.

The PTI won the July 2018 general elections and formed the government in August. At the onset, the government faced numerous “inherited challenges”, including financial instability, poverty, and inadequate education and health facilities, the report said.

However, in three years, the government boasts of many achievements, particularly sustaining the Covid-19 situation and launching projects such as Naya Pakistan Housing Programme, Ehsaas programme for social security and the Kamyab Jawan Programme for youth.

In the domain of legislation, 54 laws were enacted including the Code of Civil Procedure (Amendment) Act, 2020, Enforcement of Women Property Rights Act, 2020, and Legal Aid and Justice Authority Act, 2020 to help poor and vulnerable segments of society, the report said.

(With input from APP)

 

[MenInG]

The government has added Rs14.9 trillion to the public debt during almost three years in power, which is equal to 140% of the total debt the previous Pakistan Muslim League-Nawaz (PML-N) government acquired in five years, shattering Prime Minister Imran Khan’s dream of reducing the burden.

According to the State Bank of Pakistan’s (SBP) annual debt bulletin, released on Monday, the public debt increased to Rs39.9 trillion by June this year, an addition of Rs14.9 trillion within three years.

The total public debt increased by a whopping 60% from July 2018 to June 2021, an unsustainable 20% increase on average each year.

The addition of Rs14.907 trillion to the public debt in just three years was equal to 82% of the gross public debt that the last two elected governments of Pakistan Peoples Party (2008-2013) and PML-N (2013-2018) had added in 10 years.

With the fresh addition from fiscal year 2018-19 to 2020-21, the total public debt as of June 30, 2021 increased to Rs39.9 trillion or 83.5% of the gross domestic product (GDP), the central bank reported.

However, in terms of the size of economy, the ratio was 4.1% less than the preceding fiscal year 2019-20. It was still higher by 11% of GDP than the level left behind by the PML-N and was also in violation of the Fiscal Responsibility and Debt Limitation Act of 2005.

The Pakistan Tehreek-e-Insaf (PTI) government added on an average Rs13.6 billion a day to the public debt, which was more than double the daily average addition of Rs5.8 billion by the PML-N government.

When the PML-N government completed its five-year term, the total public debt stood at Rs24.95 trillion, or equal to 72.5% of GDP. In just three years, it has surged to 83.5% of GDP, which is unsustainable and carries huge risks for the economy and the country’s foreign policy.

In February 2019, PM Khan had vowed to bring the public debt down to Rs20 trillion. He had been very critical of the economic policies followed by the previous PPP and PML-N governments and had set up the Debt Inquiry Commission to investigate the reasons behind the addition of Rs18 trillion to the debt stock in 10 years.

Despite completion of the inquiry, the premier has withheld the release of the report.

The accumulation of debt is a direct result of the gap between expenditures and revenues, which is widening due to the inelasticity of debt servicing and defence needs and the Federal Board of Revenue’s (FBR) failure to enhance revenue collection to a sustainable level.

Steep currency depreciation also contributed to the federal government’s debt.

Pakistan’s total debt and liabilities also jumped to a record Rs47.8 trillion, an addition of Rs18 trillion in the past three fiscal years. The country’s total debt and liabilities were equal to 100.3% of GDP - a ratio that was 86.3% hardly three years ago.

Debt breakdown

The federal government’s total domestic debt increased to Rs26.2 trillion, an addition of Rs9.9 trillion or 60% in the last three fiscal years. At the end of the PML-N tenure, the domestic debt was Rs16.4 trillion.

The external debt of the federal government also increased 60% to Rs12.4 trillion in the last three fiscal years. There was a net increase of Rs4.6 trillion in the external debt, largely due to currency depreciation and building the foreign currency reserves through borrowing.

At the end of the PML-N tenure, the external debt had stood at Rs7.8 trillion.

The Rs12.4 trillion worth of external government debt does not include loans obtained for reserves building and currency swap arrangements. These loans are the responsibility of the central bank.

By June 2021 the rupee-dollar parity traded at Rs157.3 to a dollar. In June 2018, the value of the dollar was equal to Rs121.54, suggesting a massive depreciation of nearly Rs36 or 29.4%. The current parity is around Rs166.

Dollar-based total external debt

The total external debt and liabilities, which were $95.2 billion three years ago, jumped to a record $122.2 billion - an addition of $27 billion on the watch of the PTI government. In one year, the foreign debt rose by $9 billion. During the five year tenure of the PML-N, the total increase in the external debt was $34 billion.

The public external debt, which is the direct responsibility of the federal government, increased from $75.3 billion in June 2018 to $95.2 billion in June this year - an addition of $20 billion in three years.

The International Monetary Fund (IMF) debt that was $6.1 billion three years ago has jumped to $7.4 billion by June this year, according to the central bank.

The direct consequence of mounting debt pile is huge increase in the cost of debt servicing. In June 2018, the country spent a total $7.5 billion in external debt repayment and its servicing. This cost has now increased to $13.4 billion - a surge of 79% in three years. But repayments are made by signing new loans.

The country’s foreign exchange liabilities also increased by three-fourth, mainly because of the government’s decision to build foreign exchange reserves by taking new loans.

Published in The Express Tribune, August 31st, 2021.

 

[Napa]

The government has added Rs14.9 trillion to the public debt during almost three years in power, which is equal to 140% of the total debt the previous Pakistan Muslim League-Nawaz (PML-N) government acquired in five years, shattering Prime Minister Imran Khan’s dream of reducing the burden.

According to the State Bank of Pakistan’s (SBP) annual debt bulletin, released on Monday, the public debt increased to Rs39.9 trillion by June this year, an addition of Rs14.9 trillion within three years.

The total public debt increased by a whopping 60% from July 2018 to June 2021, an unsustainable 20% increase on average each year.

The addition of Rs14.907 trillion to the public debt in just three years was equal to 82% of the gross public debt that the last two elected governments of Pakistan Peoples Party (2008-2013) and PML-N (2013-2018) had added in 10 years.

With the fresh addition from fiscal year 2018-19 to 2020-21, the total public debt as of June 30, 2021 increased to Rs39.9 trillion or 83.5% of the gross domestic product (GDP), the central bank reported.

However, in terms of the size of economy, the ratio was 4.1% less than the preceding fiscal year 2019-20. It was still higher by 11% of GDP than the level left behind by the PML-N and was also in violation of the Fiscal Responsibility and Debt Limitation Act of 2005.

The Pakistan Tehreek-e-Insaf (PTI) government added on an average Rs13.6 billion a day to the public debt, which was more than double the daily average addition of Rs5.8 billion by the PML-N government.

When the PML-N government completed its five-year term, the total public debt stood at Rs24.95 trillion, or equal to 72.5% of GDP. In just three years, it has surged to 83.5% of GDP, which is unsustainable and carries huge risks for the economy and the country’s foreign policy.

In February 2019, PM Khan had vowed to bring the public debt down to Rs20 trillion. He had been very critical of the economic policies followed by the previous PPP and PML-N governments and had set up the Debt Inquiry Commission to investigate the reasons behind the addition of Rs18 trillion to the debt stock in 10 years.

Despite completion of the inquiry, the premier has withheld the release of the report.

The accumulation of debt is a direct result of the gap between expenditures and revenues, which is widening due to the inelasticity of debt servicing and defence needs and the Federal Board of Revenue’s (FBR) failure to enhance revenue collection to a sustainable level.

Steep currency depreciation also contributed to the federal government’s debt.

Pakistan’s total debt and liabilities also jumped to a record Rs47.8 trillion, an addition of Rs18 trillion in the past three fiscal years. The country’s total debt and liabilities were equal to 100.3% of GDP - a ratio that was 86.3% hardly three years ago.

Debt breakdown

The federal government’s total domestic debt increased to Rs26.2 trillion, an addition of Rs9.9 trillion or 60% in the last three fiscal years. At the end of the PML-N tenure, the domestic debt was Rs16.4 trillion.

The external debt of the federal government also increased 60% to Rs12.4 trillion in the last three fiscal years. There was a net increase of Rs4.6 trillion in the external debt, largely due to currency depreciation and building the foreign currency reserves through borrowing.

At the end of the PML-N tenure, the external debt had stood at Rs7.8 trillion.

The Rs12.4 trillion worth of external government debt does not include loans obtained for reserves building and currency swap arrangements. These loans are the responsibility of the central bank.

By June 2021 the rupee-dollar parity traded at Rs157.3 to a dollar. In June 2018, the value of the dollar was equal to Rs121.54, suggesting a massive depreciation of nearly Rs36 or 29.4%. The current parity is around Rs166.

Dollar-based total external debt

The total external debt and liabilities, which were $95.2 billion three years ago, jumped to a record $122.2 billion - an addition of $27 billion on the watch of the PTI government. In one year, the foreign debt rose by $9 billion. During the five year tenure of the PML-N, the total increase in the external debt was $34 billion.

The public external debt, which is the direct responsibility of the federal government, increased from $75.3 billion in June 2018 to $95.2 billion in June this year - an addition of $20 billion in three years.

The International Monetary Fund (IMF) debt that was $6.1 billion three years ago has jumped to $7.4 billion by June this year, according to the central bank.

The direct consequence of mounting debt pile is huge increase in the cost of debt servicing. In June 2018, the country spent a total $7.5 billion in external debt repayment and its servicing. This cost has now increased to $13.4 billion - a surge of 79% in three years. But repayments are made by signing new loans.

The country’s foreign exchange liabilities also increased by three-fourth, mainly because of the government’s decision to build foreign exchange reserves by taking new loans.

Published in The Express Tribune, August 31st, 2021.

Wow, these are some surprising numbers. I thought that with currency devaluation, reduction of imports and implementation of IMF reforms Pakistan’s debt was going down.

 

[Ahmad-GERMANFC]

Wow, these are some surprising numbers. I thought that with currency devaluation, reduction of imports and implementation of IMF reforms Pakistan’s debt was going down.

Since the debt is quoted in rupees wouldn’t the devaluation of more than 50% affect the number and show it to be higher?

Either way it’s a hole with no end in sight

 

[Ahmad-GERMANFC]

Only way out is to attract foreign investment. There’s a Tiny VC scene ($85mm for airlift few weeks ago) finally. Hopefully they can show returns and then more VC investment will come

 

[Ahmad-GERMANFC]

One positive I see is the forex reserves going up which were near record lows under PML-N

 

[Napa]

Since the debt is quoted in rupees wouldn’t the devaluation of more than 50% affect the number and show it to be higher?

Either way it’s a hole with no end in sight

Yes, the exchange rate matters. The expenses of the government and the private sector are a mix of Pakistani Rupees and foreign currencies, so it is not accurate to measure debt in just one of the two.

However, debt as a percentage of GDP is free from distortions due to currency used to measure and also inflation rate. The article says "When the PML-N government completed its five-year term, the total public debt stood at Rs24.95 trillion, or equal to 72.5% of GDP. In just three years, it has surged to 83.5% of GDP, which is unsustainable and carries huge risks for the economy and the country’s foreign policy."

 

[MenInG]

The foreign exchange reserves held by the central bank surged 14.6% on a weekly basis, hitting an all-time high of $20.15 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday.

On August 27, the foreign currency reserves held by the SBP were recorded at $20,145.6 million, up $2,567 million compared with $17,578.9 million on August 20.

On August 23, the central bank received general allocation of Special Drawing Rights (SDRs) from the International Monetary Fund (IMF) of $2,751.8 million, which helped lift the reserves to a historic high.

“After accounting for external debt payments, reserves increased by $2,567 million to $20,145.6 million,” the central bank said.

Overall liquid foreign currency reserves held by the country, including net reserves held by banks other than the SBP, stood at $27,227.7 million. Net reserves held by banks amounted to $7,082.1 million.

Earlier, Pakistan borrowed $2.5 billion through Eurobonds on March 30, 2021 by offering lucrative interest rates to lenders aimed at building the foreign exchange reserves.

It received the first loan tranche of $991.4 million from the IMF on July 9, 2019, which helped bolster the reserves. In late December 2019, the IMF released the second loan tranche of around $454 million.

The reserves also jumped on account of $2.5 billion in inflows from China. In 2020, the SBP successfully made foreign debt repayment of over $1 billion on the maturity of Sukuk.

In December 2019, the foreign exchange reserves surpassed the $10 billion mark owing to inflows from multilateral lenders including $1.3 billion from the Asian Development Bank (ADB).

Express Tribune

 

[MenInG]

Prime Minister Imran Khan reiterated on Friday his government’s resolve to continue facilitating the construction industry in order to create wealth and boost the country’s exports.

The prime minister, addressing the inaugural ceremony of the three-day ICCI Pakistan Property, Housing and Construction Expo 2021, said the government had removed many impediments, reaffirming that his government aims at fixing the remaining obstacles that face the construction sector.

The expo featured the pavilions of the commercial banks, Board of Investment, State Bank of Pakistan, companies and businesses related to the construction industry, including real estate developers, marketing firms, cement, marble, tiles, electronics, cable and many others.

The prime minister, who also took a round of the expo, urged the business sector to ensure the availability of the raw material of the construction industry in order to reduce the import bill.

He said the introduction of housing finance facilities by the government for the low-income group would enable “the 220 million population of the country would become an asset as the construction of houses would positively impact industries”.

He claimed a "construction boom" was coming to the country owing to increasing demand by the “the 220 million people for low-cost housing”.

He lamented that governments in the past paid no attention to the needs and demands of the common man and never gave the opportunity to the common man to build their own home because of a lack of mortgage-financing options, adding that obstacle was now removed by his government's efforts to pass the foreclosure law.

"Banks will give money to people for mortgage financing and then this population of 220m of ours will become an asset because it will generate demand and then construction and related industries will start running."

The prime minister said the government was striving to uplift the low-income group. Referring to the economic transformations witnessed in China, he said the country had steered around 800 million people out of poverty by uplifting the poor.

He said that Finance Minister Shaukat Tarin, who came from the private sector, was cognizant of the issues facing the construction industry “which provided most of the employment opportunities”.

The premier said the promotion of the construction industry would lead to wealth creation and revenue generation as well as bringing about the export boom. He said Singapore’s exports were around $300 billion while Pakistan would hardly touch the $30 billion mark this year.

Assuring the business sector of all-out facilitation, he urged them to pay taxes enabling the government to spend improving infrastructures like education and health.

As pointed out by the ICCI president, the prime minister also assured that the issue of lease renewal of industrial units in Islamabad would be resolved after discussion at the National Coordination Committee on Construction.

https://tribune.com.pk/story/2318548/construction-imperative-for-wealth-creation-pm

 

[Napa]

The premier said the promotion of the construction industry would lead to wealth creation and revenue generation as well as bringing about the export boom. He said Singapore’s exports were around $300 billion while Pakistan would hardly touch the $30 billion mark this year.

The idea that growth of the domestic construction industries will lead to an export boom is rather strange.

Singapore has large exports because it started its export industries with FDI from Western multinationals.

 

[Gharib Aadmi]

Shaukat Tarin needs to be elected to parliament by October 16 or he can no longer be Finance Minister. Will be a very bad for IK if he has to replace another Finance Minister.

 

[MenInG]

Pakistan’s two-month trade deficit widened 120% to $7.5 billion after imports saw a new historic peak but exports plunged for the third successive month despite heavy subsidies being given to exporters and significant currency devaluation.

The external trade figures released by the Pakistan Bureau of Statistics (PBS) at the weekend have torpedoed two-month old balance of payments projections given in the Annual Plan 2021-22. The government had shared the plan with the parliament at the time of announcing the budget.

Pakistan’s trade deficit - the gap between imports and exports - increased to $7.5 billion during July-August period of fiscal year 2021-22, the national data collecting agency stated. The deficit was $4.1 billion or 120% more than the comparative period of the previous fiscal year.

The trade deficit trend suggests that the deficit by June next year would be far higher than the targeted $28.4 billion by the government. The two-month deficit was already equal to 26% of the target.

The trade figures were slightly worse than what Adviser to Prime Minister on Commerce Razak Dawood had shared with the media early this week.

During the July-August period of this fiscal year, exports increased nearly 28% and stood at $4.6 billion as compared to $3.6 billion in the same period of last year, according to the national data collecting agency. In absolute terms, there was an increase of $989 million in exports during the first two months of the current fiscal year.

The two-month exports were equal to 17% of the annual target of $26.3 billion. But the Ministry of Commerce has projected annual exports at $31 billion.

Imports during the July-August period increased 73% to $12.1 billion. In absolute terms the imports grew $5.1 billion, according to the PBS. The two-month import bill was equal to 22% of the budgeted figures.

The external trade projections have already become irrelevant within two months, showing weakening capacity of the State Bank of Pakistan, Ministry of Commerce, Ministry of Planning and Development that makes annual plans.

Last month, Prime Minister Imran Khan asked his economic team to check the increase in the import of non-essential goods, including that of vehicles, as his government might face a challenge of an unmanageable current account deficit because of a projected record of $70 billion in imports this fiscal year.

Growing imports would either increase the external borrowing requirements or dent the official foreign exchange reserves, as the exports are not matching the pace of imports. The foreign remittances -another important source of debt-free financing is likely to increase in single digits, as per the central bank projections.

The sources said options to curb imports include imposing new tariff and non-tariff barriers. The trade deficit started widening the moment the government decided to let the economy grow after keeping it under check for two and half years.



Annualised data

For the third consecutive month Pakistan’s exports dropped from their previous levels. The country’s exports in goods stood at $2.23 billion in August over a year ago, according to the PBS. They were higher by 41% or $650 million over the same month of the last year.

However, the $2.23 billion worth of export receipts were the lowest in three months. The exports had peaked to $2.73 billion in June, prompting celebrations on twitter - the micro blogging website - by the government. Then it dropped to $2.34 billion in July and finally further slipped to $2.32 billion in August.

Pakistan’s exports have long remained around $2 billion a month and the trend did not significantly change despite 39% currency depreciation during the Pakistan Tehreek-e-Insaf (PTI) government’s tenure in the past three years.

Every successive government has doled out billions of rupees in subsidies to the exporters every year on account of cheap loans, subsidised provision of electricity and gas and reduced income tax rates. The exporters pay a nominal tax on their incomes. Yet, they have failed and the government does not seem ready to review its flawed strategy of pampering a few hundred exporters.

The imports last month hit a record high of $6.5 billion, which were higher by 95% or $3.14 billion, according to the PBS. As a result, the yearly trade deficit widened 144% to $4.2 billion in August.

Monthly data

On a month-on-month basis, exports decreased over 4.5% to $2.23 billion, according to the PBS. There was a reduction of $106 million in export receipts in August as compared to the preceding month. The imports registered a surge of 15.4% and stood at $6.5 billion last month. In absolute terms, there was an increase of $862 million in the import bill last month. As a result, the trade deficit widened 30% or $968 million in August over July.

Published in The Express Tribune, September 5th, 2021.

 

[Major]

Electricity bill in Pakistan is calculated based on 31 days. THis time around under the PTI govt, the bill was calculated in 37 days. Thus, higher units being charged and more money being charged in everyone's electricity bill. This extra charge can go up by 5-10 K.


We the pakistanis have to bare this joke of a govt..

 

[MenInG]

Taking cues from burgeoning import payments and trade deficit, the Pakistani currency hit an all-time low of Rs168.94 against the US dollar in the inter-bank market on Tuesday.

"Apparently, there is no space left for rupee to maintain the downturn,” Ismail Iqbal Securities Head of Research Fahad Rauf said while talking to The Express Tribune. “If it drops any further, the decline would be unsustainable and short-lived."

"The rupee might consolidate at around the current level in the short-run and trade between Rs165-168 over the next six months (in medium run)."

During the day, the rupee breached the previous all-time low value of Rs168.43, reached on August 26, 2020, according to Pakistan's central bank's data.

With the latest drop of Rs0.84 in intra-day trading on Tuesday, the rupee has lost 7.28% (or Rs11.51) to date since the start of the current fiscal year on July 1, 2021.

The local currency has maintained downtrend after it touched 22-month high of Rs152.27 in May 2021, losing a cumulative 10.92% (or Rs16.63) in the past four months to date.

"The spike of over $1 billion in the country's trade deficit to over $4.2 billion in the single month of August is mounting pressure on rupee," Rauf said.

He elaborated the import payment hit historic high of around $6.4 billion in August while the previous peak was recorded in June at $6.3 billion. On the flipside, export earnings have remained sluggish at around $2.2 billion a month during the same months.

The uptrend in international commodity prices suggests that Pakistan’s import bill would remain high going forward.

The prices of oil and food items are soaring in the world markets. In addition to this, businesses are set to make hefty import of plant and machinery to set up new factories and expand the existing production lines under the central bank's initiative Temporary Economic Refinance Facility (TERF), he said.

Imports are set to skyrocket due to the government’s policy of expansion and growth in the domestic economy, he said.

The central bank has projected the country's trade deficit to widen to 2-3% of GDP in FY22 compared to 10-year low at 0.6% in FY21.

 

[b.lesner]

ISLAMABAD:
The State Bank of Pakistan (SBP) pumped $1.2 billion into the inter-bank market in three months to defend the weakening rupee but could not stop the local currency from falling to a historic low, highlighting the cost of expansionary policies without fixing the structural economic flaws.

The $1.2 billion injection into the foreign exchange market is contrary to the stated policies of the central bank, International Monetary Fund (IMF) and finance ministry, as all the three institutions claim that the rupee value is determined by market forces.

From mid-June to the first week of September, the central bank injected $1.2 billion out of its reserves, government sources told The Express Tribune. The maximum single-day injection of $100 million was made in July, followed by $85 million in August, they added.

The central bank reserves are built by taking expensive foreign loans like floating the Eurobond and issuing the expensive Naya Pakistan Certificates. The $1.2 billion injection was slightly higher than the $1 billion Eurobond loan that Pakistan took at 5.9% to 8.5% interest rate in July this year.

With the fresh injection, at least $5.8 billion has been thrown in the inter-bank market during the tenure of Pakistan Tehreek-e-Insaf (PTI) government to maintain an artificial value of the rupee.

Neither the Ministry of Finance nor the central bank explicitly denied that the SBP threw dollars in the market to defend the rupee.

“FX management is the sole responsibility of SBP and Finance Division does not interfere,” said the Ministry of Finance while responding to a question whether the SBP pumped money with the consent of the ministry.

“Since June 2019, Pakistan has adopted a market-based flexible exchange rate system, where the exchange rate is determined by market demand and supply conditions. Under this system, the role of SBP’s interventions in the FX market is limited to prevent disorderly market conditions, while not suppressing an underlying trend,” said SBP chief spokesman Abid Qamar.

However, sources said that the $1.2 billion did not fall under the category of intervention “to prevent disorderly market conditions”. They said that the move was against the fundamental policy of market-determined exchange rate and the central bank would have to explain this to the IMF during upcoming talks.

Qamar said that “when the exchange rate does not reflect realistic market conditions it can contribute to unsustainable current account deficits and repeated balance of payments problems”. SBP does not comment on speculations about market interventions, he added.

The chief spokesman neither denied nor confirmed that the central bank threw $1.2 billion in the market to defend the rupee.

But even the $1.2 billion injection could not stop a steep devaluation of the currency that eventually dipped to Rs168.94 to a dollar from Rs155.74 when the central bank started throwing money in the market.

The Pakistani currency hit an all-time low of Rs168.94 against the US dollar in the inter-bank market on Tuesday. The rupee has lost 7.28% or Rs11.51 to date since the start of the current fiscal year on July 1, 2021. This was despite the fact that since July the SBP threw $815 million in the exchange market, sources added.

The country’s external sector has started coming under pressure after the government adopted expansionary fiscal and monetary policies without first fixing the fundamental problems.

Like the PML-N government, the PTI government too is financing economic growth through debt, which is highly unsustainable, according to market analysts.

An Asian Development Bank study has come to the conclusion that with its existing structural problems, Pakistan is prone to the balance of payments crisis the moment its economic growth crosses 3.7%.

The country’s imports peaked to a new two-month record level of $12.1 billion in July and August, causing a $7.5 billion deficit, up by 120%.

“The trade deficit will increase but there is no need to worry about it,” Finance Minister Shaukat Tarin said on Tuesday while addressing a press conference.

He hoped that the trade deficit would be manageable, saying that if the economy over-heated the government would do some “tweaking”.

It is not for the first time that the central bank has pumped money into the inter-bank market to artificially defend the rupee.

 

[Napa]

Pakistan’s two-month trade deficit widened 120% to $7.5 billion after imports saw a new historic peak but exports plunged for the third successive month despite heavy subsidies being given to exporters and significant currency devaluation.

Taking cues from burgeoning import payments and trade deficit, the Pakistani currency hit an all-time low of Rs168.94 against the US dollar in the inter-bank market on Tuesday.

"Apparently, there is no space left for rupee to maintain the downturn,” Ismail Iqbal Securities Head of Research Fahad Rauf said while talking to The Express Tribune. “If it drops any further, the decline would be unsustainable and short-lived."

This guy has no idea what he is talking about. As imports rise and exports fall, the currency devaluation is inevitable and the currency will continue falling till imports fall and exports rise sufficiently.

ISLAMABAD: The State Bank of Pakistan (SBP) pumped $1.2 billion into the inter-bank market in three months to defend the weakening rupee but could not stop the local currency from falling to a historic low, highlighting the cost of expansionary policies without fixing the structural economic flaws.

The $1.2 billion injection into the foreign exchange market is contrary to the stated policies of the central bank, International Monetary Fund (IMF) and finance ministry, as all the three institutions claim that the rupee value is determined by market forces.

Burning through forex reserves to "defend" the currency is not sustainable. Pakistan needs to increase its exports, for which it needs to develop modern industries. Otherwise the currency will keep devaluing and essential imports like oil will keep getting more expensive fueling inflation and further impoverishment of the poor.

 

[KillerBee]

At the moment, things are looking really grim. CPEC is on halt, FDI is really low and exports are not increasing at a good pace. Imports are required for high GDP growth but this increase in imports is massively increasing the CAD. Higher CAD is leading to devaluation of Rupees which won't stop happening until SBP interferes which it is refusing to do so.

 

[Napa]

At the moment, things are looking really grim. CPEC is on halt, FDI is really low and exports are not increasing at a good pace. Imports are required for high GDP growth but this increase in imports is massively increasing the CAD. Higher CAD is leading to devaluation of Rupees which won't stop happening until SBP interferes which it is refusing to do so.

1. Imports are indeed required for GDP growth, but imports of consumer goods like cars won't lead to GDP growth.

2. SBP intervention to prop up the PKR results in depletion of forex reserves, and Pakistan only has a limited amount of forex reserves.

 

[Manunited18]

Imran has tried his best, pakistan requires major surgery and for that a young exuberant leader is required.

 

[KillerBee]

Then i guess the only option is to let Rupee slide until exports prop up somehow.

 

[MenInG]

KARACHI: Stocks tumbled in the second session on Friday when the panic-stricken investors fell over each other in their attempt to sell and flee the market. The KSE-100 index thus closed at 46,636 points representing a loss of 284 points, or 0.61 per cent.

It was a depressing ending to trading on a day when the market remained in green all through the first session with the index hitting an intraday high by 261 points. The massive bleeding in the second half not only wiped off all the gains but pushed the index to intraday low by 365 points. Overall, the market saw volatility by 628 points.

Most market dealers said that investors were petrified over the news of New Zealand cricket team calling off their tour of Pakistan and were making arrangements to leave the country citing security concerns. Others cited the uncertainty over SBP Monetary Policy statement to be read out on Monday.

Investors were also concerned over the economy as the current account deficit (CAD) for August widened to $1,476m compared with a surplus of $255m during Aug 2020. The primary reason for surging CAD was 86pc year-on-year jump in imports amid high global crude oil prices, uncertainty over rupee parity and foreign outflows.

For many knowledgeable people the tale of investor panic over the threat to New Zealand cricket was difficult to digest. The Pakistan market is pretty resilient and what better proof then the market behaviour on June 29, 2000 when the market came under terror attack. Yet the investors managed to remain calm and the index recorded gains of 242 points that day.

Selling pressure was witnessed in the technology sector where AVN was down 3.5pc, Telecard 3.1pc, NetSol 2.8pc, System Ltd 1.8pc and TRG 1.5pc.

The trading volume and value for the day stood at 387m shares and Rs.16.2bn respectively. WTL was volume leader with 42m shares.

Published in Dawn, September 18th, 2021

 

[Noman]

Imran has tried his best, pakistan requires major surgery and for that a young exuberant leader is required.

Imran khan here to stay at least 7 years more - But I like your idea

 

[Napa]

Imran has tried his best, pakistan requires major surgery and for that a young exuberant leader is required.

The issue is not whether the leader is young or old, it is what policies they follow. If the leader curbs the jihadis, ISI and Army and makes the country conducive for investments the way Hasina in Bangladesh has done, then the economy will boom. Otherwise it will stagnate.

 

[Manunited18]

ISI and the Army are the reason for Pakistan's existence today, specially when you have a neighbour who lives, breaths, destruction of the state.

 

[OMB]

Taxes on imports fuel inflation

Govt collects one-third of import taxes from petroleum, cooking oil products

The government collected a whopping one-third of import taxes or Rs149 billion on imports of nine energy and edible oil products during the first two months of this fiscal year, indicating reasons behind constant rise in prices of petroleum products and an essential kitchen item.

The Federal Board of Revenue (FBR) data showed that the Rs149 billion revenues during July-August 2021 period were also 132% more than the collection during the same period of the last fiscal year. This shows the impact of increase in tax rates, higher commodity prices and higher imports.

The collection during July-August 2020 was Rs64 billion.

Prime Minister Imran Khan again approved to increase the petrol prices to Rs123 per litre - the highest-ever price charged in Pakistan. The government’s decision to increase customs duty rates on petroleum products have also significantly contributed to price determination.

During July-August period of the current fiscal year, the FBR collected Rs149 billion in taxes at the import stage on petrol, natural gas, crude oil (a new tax), high speed diesel, bituminous coal, RBD palm oil, olein palm, soya bean oil and furnace oil, according to FBR statistics.

One of the major differences was imposition of 17% sales tax on crude oil and increase in customs duty on import of petrol from 5% to 10% and changing tax rates on palm oil.

The Rs149 billion revenues were equal to almost 33% of the total taxes collected at the import stage in two months. It was also 17.5% of the total Rs850 billion in taxes that the FBR generated in July-August period.

The data compiled by the FBR relating to duties and taxes collected at the import stage highlights heavy indirect taxation that has started hurting the consumers badly. The taxes that are paid on their domestic sales are over and above this collection.

Due to increasing share of the import taxes, the share of the indirect taxes in overall tax collection has gone up to 70%, which is hurting the poor and middle income groups more than the rich class.

Pakistan’s imports are also poised to significantly increase due to various factors like expansion in economic activities and high food imports due to drop in their domestic production.

The central bank had projected $61 billion in imports in the current fiscal year but the commerce ministry has lately estimated a record $72 billion imports.

On the back of record imports, the current account deficit widened to $2.3 billion in July-August 2021, which was also equal to 100% of the annual deficit projection given in the Annual Plan 2021-22 by the Ministry of Planning and Development. This also reflects poorly on the government that cannot make realistic macroeconomic estimates.

Read Govt probes TCP chief over delay in wheat import

In July-August, the FBR collected Rs28.6 billion in taxes on import of petrol on account of customs duties, sales tax and other taxes. This was higher by 80% or Rs12.8 billion - and despite reduction in the quantity of petrol imports, according to the FBR numbers.

The customs duties collection on petrol import was Rs12.1 billion in two months -thanks to the government’s decision to double the customs duty rate to 10% in July this year.

The import of gas was the second biggest revenue spinner at the import stage. The FBR collected Rs25.6 billion in taxes on gas import - higher by 190% or Rs16.8 billion over the same period of the last year. The value of the LNG/gas import more than doubled to Rs106 billion.

The crude oil imports fetched overRs22 billion in taxes at the import stage alone up by 450% or nearly Rs18 billion after the government slapped 17% GST on crude oil imports in the budget. Out of Rs22 billion, the sales tax collection was Rs18.6 billion.

The Rs17.5 billion collection of taxes on import of high speed diesel was the fourth largest revenue spinner at the import stage - also higher by 101% or Rs8.8 billion.

These numbers suggest that the import taxes were one of the key reasons behind historically high petroleum products prices in Pakistan. The depreciation of the rupee against the US dollar was also adding fuel to the fire.

The higher prices of diesel were also causing inflation due to increase in transport fares and upsurge in agriculture produce cost in areas where the canal water is not available.

Bituminous coal import was the fifth highest revenue spinner at the import stage - bringing in Rs12.2 billion worth taxes that were higher by Rs7.4 billion or 154%.

Palm olein import generated Rs12.1 billion worth taxes in two months - up by 28%. Similarly, the RBD palm oil imports fetched another Rs10.4 billion - up 116%. The soya bean import oil import fetched Rs8.7 billion in taxes - up by 93%- in just two months.

Various cooking oil brands have increased their price to Rs330-360 per litre, which has affected every household.

The furnace oil import gave another Rs11.8 billion in two-month period - higher by Rs9 billion or 321%.

https://tribune.com.pk/story/2320877/taxes-on-imports-fuel-inflation?_gl=1*1ayekax*_ga*YW1wLWVaa0lBOG0wRk1ybGE2QjVVUXd1TUs5X2RoMWxwd2RCMHZFeS1HVnpTSTdlOXdJV19VSmJRbzRROVktUFZYUlI

 

[Gharib Aadmi]

Imran has tried his best, pakistan requires major surgery and for that a young exuberant leader is required.

Thats exactly what IK wants to do.

“I repeat the reforms are painful … It’s like a surgery. When you conduct surgery for a while, the patient suffers, but that improves,” Khan said.

“The worst thing that can happen for society is that you keep postponing reforms because of the fear that you would have opposition, the vested interests stand up and you don’t do reforms.”

https://www.aljazeera.com/economy/2...istan-prime-minister-warns-of-painful-reforms

IK got a country that was at rock bottom in 2018. Maybe he will fail in reforming the country, but we need to give him more time. I would say at least until 2028, so he has 2 terms and 10 full years.

 

[Gharib Aadmi]

ISLAMABAD:
The State Bank of Pakistan (SBP) pumped $1.2 billion into the inter-bank market in three months to defend the weakening rupee but could not stop the local currency from falling to a historic low, highlighting the cost of expansionary policies without fixing the structural economic flaws.

This is a mistake. The government needs to let the market determine the value of the rupee, and not do what PML N did and artificially prop it up. If the rupee goes to 200, it goes to 200.

 

[OMB]

Govt again allows use of cheques for business transactions

Suspends digital mode payment requirement for 40 days

The government on Sunday again allowed businesses to use banking cheques for making payments of over Rs250,000 after disbanding their use just two days ago, underscoring its lack of preparedness before enforcing a radical change to broaden tax base.

The Federal Board of Revenue (FBR) on Sunday announced to suspend the two-day old new compulsory legal requirement of making over Rs250,000 business-related payments only through digital mode.

The mandatory legal requirement has initially been suspended for 40 days, as neither the business community nor the banking system is prepared to deal with this.

The compulsory digital payment requirement had been enforced through a presidential ordinance instead of bringing the bill to parliament for a debate and collective decision making.

“FBR is considering allowing the corporate taxpayers a grace period of 40 days to switch over to the digital mode of payments effective November 1, 2021 under Tax Laws (3rd Amendment) Ordinance, 2021,” according to a statement.

Read Govt makes heavy interest payments

A formal notification to put the compulsory requirement on hold is expected to be issued on Monday (today) after legal vetting, according to the sources.

Had the FBR not suspended its ill-timed decision, the businesses would have come to a halt from Monday due to this requirement. The cash or cheque payment would have been treated as income instead of expenditure, had the FBR not suspended its decision.

The revenue board stated that the Tax Laws (third Amendment) Ordinance, 2021 has introduced significant changes to the Income Tax ordinance, 2001 with a view to documentation of the economy, capture the supply chains, and broaden the tax base.

The FBR noted that owing to lack of digital readiness by some corporate taxpayers immediately, it was considering to allow the corporate taxpayers a grace period of 40 days to switch over to the digital mode of payments effective November 1, 2021.

It said that in the intervening period they may use the traditional banking transaction methods including cross cheques, cross bank drafts, cross pay orders, or any other crossed banking instrument showing transfer of amount from the business bank account of the taxpayer in addition to digital mode of payment as long as those are compliant with the law.

The Clause (la) in section 21 had been inserted in the presidential ordinance, making it mandatory for companies to make payments on expenditures exceeding Rs250,000 through digital mode only, according to the FBR.

The revenue board’s decision to move towards digitisation of economy is a step in right direction but like many other good decisions it had been taken in haste and without proper consultations.

The Express Tribune, on August 27 had highlighted this issue and wrote “the government has decided to enforce digital mode of payments without first plugging loopholes that led to creation of black money like difference between market value and FBR values of properties, agriculture income tax exemption and tax-free foreign remittances”.

Earlier, the government had announced compulsory requirement of producing CNIC on every Rs50,000 transaction that also met with the same fate.

The FBR decided to suspend the digital payment clause 10 days before the trading community’s call to hold protest rally in front of FBR headquarters on September 29 against its drive to integrate businesses with its tax system.

While explaining the reason behind introducing digital payment, the FBR said that currently grey transactions (hiding/suppressing sales invoices and un-reconciled payments through open/revolving cheque or cash) are highly prevalent in business value chains. Almost 99% of all business transactions are on cash/cheque, it added.

Read more FTO directs FBR to review 103 tax credit claims

Moreover, third party payments are also highly prevalent in organised and informal sector whereby businesses do not use their own bank accounts when making payment for supplies and tell their own customers/transaction based informal-investors to make direct payments to the principle supplier.

The FBR said that such practices are “highly prevalent in supply chains and has become an accepted norm”. The cross cheques create financial inefficiency due to clearing period of 1-3 days.

Similarly, cross cheques/open cheques do not carry the “purpose” of the payment or its relationship with the invoice.

“Despite many attempts to increase documentation of supply chains such as withholding tax and further tax, the number of unregistered distributors and retailers remains high whereby sales are suppressed and due income tax is completely avoided”.

In its handout, the FBR did not mention about corrupt practices and the reversal of polices that also contribute to keeping the businesses away from the tax system.

Under the law, the FBR was authorised to open only five years old tax cases. But through the same ordinance, the FBR has created a room to go as back as 20 years to scrutinise the tax record of the people.

The FBR is also engaging SBP to issue necessary instructions to operationalise this important provision of law as well as encourage the banking sector to facilitate the corporate businesses to accomplish digitisation within the stipulated timeframe, the revenue board said.

https://tribune.com.pk/story/2321043/govt-again-allows-use-of-cheques-for-business-transactions