KARACHI: State Bank of Pakistan (SBP) on Thursday reduced key policy rate by 200 basis points to nine percent to cushion the impact of coronavirus shock on growth and employment.
(more…)Author: Mrs. Anjum Shahnawaz
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Foreign exchange reserves increase to $17.295 billion
KARACHI: Pakistan’s foreign exchange reserves have increased by $307 million to $17.295 billion by week ended April 10, 2020.
A week ago the foreign exchange reserves were at $16.988 billion, the State Bank of Pakistan (SBP) said on Thursday.
The officials foreign exchange reserves of the central bank increased by $252 million to $10.974 billion by week ended April 10, 2020 as compared with $10.722 billion a week ago.
Similarly, the foreign exchange reserves held by commercial banks increased by $55 million to $6.321 billion by week ended April 10, 2020 as compared with $6.266 billion a week ago.
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Share market gains 87 points in range bound activity
KARACHI: The share market gained 87 points on Thursday after trading in range bound during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 31,330 points as against 31,242 points showing an increase of 87 points.
Analysts at Arif Habib Limited said that the market traded in a narrow range today between +205 points and -226 points, and closing the session +87 points.
Yesterday’s PIB auction that resulted in normalization of yield curve and declining of yields gave good reasons for investors to come back to equities.
However, weakening oil fundamentals kept the investors in limbo on whether to book profit or take new positions.
Similar to yesterday’s performance, Fertilizer sector maintained the momentum with further support from Cement and E&P sectors.
Banking sector, on the other hand, faced selling pressure, bearing the brunt from foreign investors in past couple of sessions.
Cement sector managed to post some recovery today and maintained top position in trading volumes with 34.6 million shares, followed by Chemical (12.9 million) and Vanaspati (10.9 million).
Among scrips, MLCF topped the volumes with 14.8 million shares, followed by UNITY (10.9 million) and HASCOL (7.2 million).
Sectors contributing to the performance include E&P (+39 points), Tobacco (+31 points), Pharma (+25 points), Inv Banks (+23 points), Power (+16 points), Banks (-57 points) and Insurance (-12 points).
Volumes declined from 185.6 million shares to 119.1 million shares (-36 percent DoD). Average traded value also declined by 36 percent to reach US$ 28.5 million as against US$ 44.8 million.
Stocks that contributed significantly to the volumes include MLCF, UNITY, HASCOL, EPCL and PIOC, which formed 36 percent of total volumes.
Stocks that contributed positively to the index include PAKT (+24 points), DAWH (24 points), OGDC (+18 points), FFC (+17 points) and COLG (+15 points). Stocks that contributed negatively include MCB (-23 points), HBL (-20 points), LUCK (-11 points), UBL (-11 points), and EFERT (-11 points).
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Rupee gains 10 paisas on inflows
KARACHI: The Pak Rupee gained 10 paisas against dollar on Thursday owing to inflows of export receipts and measures to facilitate home remittances.
The rupee ended Rs166.88 to the dollar from previous day’s closing of Rs166.98 in interbank foreign exchange market.
Currency dealers said that the rupee appreciated on inflows of export receipts during the day.
Further, incentive scheme of State Bank of Pakistan (SBP) for promotion of home remittances also improved market sentiments.
A day earlier, the SBP expanded incentive scheme for exchange companies for promoting home remittances through formal channels.
The SBP previously on December 06, 2019 introduced the incentive scheme on which exchange companies were allowed market expenses reimbursement of Re. 1 per each incremental US dollar mobilized over 15 percent growth.
The SBP in this regard decided that with immediate effect the existing incentive scheme for marketing of home remittances i.e. Re 1 against US Dollar 01 of remittance amount beyond 15 percent growth over last year may now be based on tiered growth i.e. Rs. 0.50 on 5 percent growth, Rs. 0.75 on 10 percent growth and Rs. 1.00 on 15 percent growth.
Through another circular issued to authorized dealers in foreign exchange and microfinance banks, the SBP said that it has been decided with immediate effect that the prevailing rate of TT charges may be enhanced from SAR 10/- to SAR 20/- for transactions between USD 100-200.
The SBP further said that the existing Incentive scheme for marketing of home remittances i.e. PKR 01 against USD 01 of remittance amount beyond 15 percent growth over last year may now be based on tiered growth i.e. Rs. 0.50 on 5 percent growth, Rs. 0.75 on 10 percent growth and Rs. 1.00 on 15 percent growth.
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Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over lower number of return filers and asked Federal Board of Revenue (FBR) to identify reasons that why non-filers happy in paying higher rate of withholding tax.
According to a statement on Thursday, the FPCCI has finalize proposals for upcoming budget 2020/2021.
The proposals have been drafted keeping in view of the objectives of (i) Revamping Taxation System (ii) Documentation of Economy (iii) Employment generation through Industrialization (iv) Promoting a responsive and equitable Taxation System (v) Infrastructure Development (vi) Trickledown effect of the fiscal space to the grass root level etc., and would be submitted to the concerned quarters within fortnight”.
This was stated by Mian Anjum Nisar, President, FPCCI and Zakaria Usman, Convener of the FPCCI Budget Advisory Council.
Elaborating the methodology of the budget proposals exercise, they stated that the FPCCI with a consistent commitment to developing and promoting a modern, responsive and equitable taxation system, has formulated these proposals on the basis of impartial, unbiased and transparent manner after taking a painstaking lengthy process which involved incorporating feedback received on matters related to revenue and taxation throughout the year from our members located across the country and input obtained from our member trade bodies, stakeholders, tax practitioners, knowledgeable people etc., through invitation of proposals, organizing workshops and holding a series of Budget Advisory Council meetings wherein these proposals were discussed in detail and some contradictory proposals were re-examined and final proposals were redesigned in line with the best interest of the country.
They informed that the FPCCI Budgetary document consists of three Volumes – Vol-I discusses issues / solution of macroeconomic nature ; Vol-II contains policy issues relevant to Taxation (Sales Tax, FED, Income Tax and Customs) ; while Vol-III contains Industry Specific Proposals received from FPCCI members .
Moreover, the FPCCI would also submit its proposals to meet the challenges being faced by the trade & industry due to outbreak of COVID-19 as its severe and adverse impacts on various aspects of Pakistan’s economy is quite discern which may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, increased unemployment etc.
The FPCCI Chief Mian Anjum Nisar added, “The Macro Economic proposals contains long term action plan to boost exports ; promotion of Branding ; Enhancing SMEs sector ; Monetary Policy ; Creating Employment Opportunities through industrialization ; Taxpayers Bill of Rights ; Independent Tax Judicial System etc”.
Zakaria Usman, Convener of the Budget Advisory Council disclosed, “In Direct Taxes, it has proposed to the Federal Board of Revenue (FBR) to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets; broadening of tax base; curtail parallel economy etc., as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.
At present the total numbers of NTN holders in Pakistan are over 4 million, however, the FBR has miserably failed to obtain return of income from such NTN holders and increase the number of active taxpayer during the last decade.
They added that according to a study, 2.1 million Pakistanis (individuals) filed income tax returns in 2006-07 which shows that FBR during the last 14 years could not fetch much tax filers, despite prescribing higher withholding tax rates for non-filers”.
“This underscores the need that FBR should conduct a study to find out what has gone wrong that even after penalizing the non-filers, they are happy to pay more by way of advance tax instead of filing returns”.
He proposed that it is desirable that measures should be taken to facilitate to those, who are already existing taxpayers and contributing in the national tax pool in all manners, so that they become goodwill ambassador for FBR.
“Resultantly, since many years, the registered taxpayers are less than 1 percent of the population of our country, which need to be enhanced”, he concluded.
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Duty free import increases by 17pc despite phasing out exemptions
KARACHI: Despite elimination of exemption and strengthening enforcement the duty free import surged by 17.1 percent during 2018/2019, according to official documents.
The FBR in its report released this month said that the duty free imports increased by 17.1 percent to Rs2,445 billion during fiscal year 2018/2019 as compared with Rs2,087 billion in the preceding fiscal year.
The documents revealed that goods under Chapter 27 of Customs Tariff were imported duty free worth Rs600 billion during fiscal year 2018/2019 as compared with Rs491 billion in the corresponding period of the preceding fiscal year.
The import of products including Mineral fuels, mineral oils and products under this chapter has increased by 22.3 percent during the period under review.
An amount of Rs317 billion has been allowed duty free for the import of boilers, machinery and mechanical during fiscal year 2018/2019, which is 12.5 percent higher than Rs282 billion in the same period of the preceding fiscal year.
The customs authorities granted duty free import of around Rs189 billion for the clearance of organic chemical during fiscal year 2018/2019 as compared with Rs144.85 billion in the preceding fiscal year, showing growth of 30.5 percent.
Despite lowering of tariff over the years, the customs duty is still one of the important sources of Federal Tax collection. The Dutiable Imports are the tax base for Customs Duty.
The collection of customs duty stood at around Rs686 billion and has contributed around 28.8 percent in the Indirect Taxes and 17.9 percent in total taxes during the F.Y.: 2018-2019.
It has increased by around 13 percent as compared to previous year.
The target of customs duty was Rs. 735 billion during FY: 2018-2019 which was missed by 6.7 percent.
Source: FBR Out of 15 major revenue spinners, 13 items of imports recorded positive growth during FY: 2018-19 mainly due to increased Imports. On the other hand, only automobile (Ch:87) and ceramic products recorded negative growths.
The details of Customs Duty collection from major commodity groups (chapters) are presented in table below.
Source: FBR -
Tax collection from cash withdrawal falls by 52 percent
ISLAMABAD: The collection of withholding income tax from cash withdrawal from banks fell by 52 percent during first half of the current fiscal year as the government withdrew the levy on active taxpayers.
The collection of withholding income tax fell to Rs8.6 billion during July – December of current fiscal year 2019/2020 as compared with Rs17.8 billion collected in the corresponding period of the last fiscal year, according to official data.
Through Finance Act, 2019, the imposition of withholding tax on cash withdrawal by active taxpayers was eliminated in order to encourage income tax return filing.
However, the withholding tax rate at the rate of 0.6 percent is still leviable on persons not appearing on the active taxpayers list issued by the Federal Board of Revenue (FBR).
At present every banking company is required under Section 231A of Income Tax Ordinance, 2001 to collect withholding tax at 0.6 percent on payment for cash withdrawal, or sum total of payment for cash withdrawal, in a day, exceeding Rs50,000 for persons not appearing the Active Taxpayers List (ATL).
The same rate of 0.6 percent is applicable under Section 231AA and Section 231AA of the Ordinance on sale against cash of any instrument including demand draft, payment order, CDR, STDR, RTC, any other instrument of bearer nature or on receipt of cash on cancellation of any of these instruments where sum total of transactions exceeds Rs, 25,000 in a day, for persons not appearing in the Active Taxpayers’ List and transfer of any sum against cash through online transfer, telegraphic transfer mail transfer or any other mode of electronic transfer, where sum total of transactions exceed Rs. 25,000/-in a day, for persons not appearing in the Active Payers’ List.
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So far 80,368 borrowers avail loan rescheduling facility
KARACHI: State Bank of Pakistan (SBP) on Wednesday said that around 80,368 borrowers availed deferment of principal repayment facility, which was granted considering outbreak of coronavirus.
The SBP said that under the relief package up till April 10, 2020 around 80368 borrowers benefitted from deferment of principal repayment worth Rs20 billion.
Additional Rs 1.4 billion has been restructured. Meanwhile, 5126 application were under process, the SBP said.
Previously, the SBP through a circular noted that banks and DFIs will defer the payment of principal on loans and advances by one year.
To avail this relaxation, borrowers should submit a written request to the banks before June 30, 2020.
They will, however, continue to service the mark-up amount as per agreed terms and conditions.
The deferment of principal will not affect borrower’s credit history and such facilities will also not be reported as restructured/rescheduled in the credit bureau’s data.
The total amount of principal coming due over the next year is about Rs. 4,700 billion.
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Equity market sheds 19 points in mixed trading
KARACHI: The equity market fell by 19 points on Wednesday in mixed trading sessions during the day.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 31,242 points as against 31,223 points showing an increase of 19 points.
Analysts at Arif Habib Limited said that the market opened on a positive note today with 165 points, which was primarily the reaction to partial opening of various industries and sectors decided by the federal and provincial governments.
The index surged by 572 points, barring E&P and O&GMCs, during the session despite downward trend in international crude prices.
As WTI dropped by more than 4.5 percent to touch 18-year low (2002) of US$ 19.20/bbl, E&P and O&GMCs lost support from levels maintained in trades earlier in the session.
Cement Sector, which was the highlight of today and performed well during the session also saw profit booking by the end of session. Strong price performance was contributed by Fertilizer Sector.
Early on, the support for benchmark KSE-100 index came from index heavy weights, ENGRO, HUBC, LUCK, DAWH and FFC.
Secondary market PIB yields also dropped further to indicate optimism for a rate cut in the upcoming monetary policy. 10yr PIB was observed trading at 8.65 percent.
Cement sector continued leading the volumes with 61.9 million shares, followed by O&GMCs (15.6 million) and Chemical (14.2 million). Among scrips, MLCF realized 22.5 million shares, followed by HASCOL (10.9 million) and FCCL (9.5 million).
Sectors contributing to the performance include E&P (-107 points), Banks (-36 points), Food (-21 points), Inv Banks (+60 points), Cement (+41 points), Fertilizer (+26 points) and Pharma (+23 points).
Volumes increased from 130.4 million shares to 1856 million shares (+42 percent DoD) Average traded value also increased by 55 percent to reach US$ 44.8 million as against US$ 28.8 million.
Stocks that contributed significantly to the volumes include MLCF, HASCOL, FCCL, PIOC and DGKC, which formed 32 percent of total volumes.
Stocks that contributed positively to the index include DAWH (+59 points), LUCK (18 points), FFC (+14 points), ABOT (+12 points) and EPCL (+11 points). Stocks that contributed negatively include OGDC (-37 points), PPL (-35 points), POL (-29 points), NESTLE (-25 points), and BAFL (-16 points).
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Rupee extends losses on import payment
KARACHI: The Pak Rupee extended losses against dollar on Wednesday owing to persistent demand for import payment, dealers said.
The rupee ended at Rs166.98 to the dollar from previous day’s closing of Rs166.95 in interbank foreign exchange market.
The currency dealers said that the rupee was remained under pressure due to higher demand of the foreign currency for commodity payment, mainly related to holy month of Ramazan.
Currency experts said that the rupee may make gain in coming days with expected disbursement by the IMF.
They said that the IMF disbursement would help the country to improve foreign exchange reserves.
The experts said that the rupee likely to gain further in future owing to lower import payment demand after decline in international oil prices.
The import bill of the country has declined by 21 percent in March 2020 over the previous month owing to lockdown to contain coronavirus pandemic.
The import bill was at $3.3 billion in March 2020 as compared with $4.185 billion in February 2020, according to data released by Pakistan Bureau of Statistics (PBS) on Friday.
Similarly, the pandemic also adversely affected the country’s exports. The exports fell by 15.56 percent to $1.8 billion in March 2020 as compared with $2.14 billion in February 2020.
The total import bill during July – March 2019/2020 fell by 14.42 percent to $38.81 billion as compared with $40.68 billion in the corresponding period of the last fiscal year.
However, the exports registered increase of 2.23 percent during first nine months of current fiscal year to $17.45 billion as compared with $17 billion in the corresponding months of the last fiscal year.
The trade deficit during first nine months contracted by 26.45 percent to $17.36 billion as compared with the deficit of $23.61 billion in the corresponding period of the last fiscal year.