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  • ECC allows duty free import of cotton

    ECC allows duty free import of cotton

    ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved duty-free import of cotton.

    The ECC took the decision at a meeting held here under the chairmanship of Advisor to Prime Minister on Finance and Revenue, Hafeez Shiekh in the chair.

    The meeting also allowed cotton import through the Torkham border.

    The ECC was informed that Cotton remained duty-free till the slab of zero percent was abolished in 2014-2015 and Custom Duty of 1 percent was imposed along with 5 percent Sales Tax.

    Later on, 1 percent slab was increased to 2 percent and then 3 percent along with 2 percent additional customs duty to make it 5 percent.

    Since 2017 the duties are withdrawn from January/February and re-imposed in July-August. It was also discussed that by January 01, 2010 the majority of the cotton would be lifted from the farmers.

    Therefore, to further protect the farmers, the meeting allowed duty-free import of cotton with effect from January 15, 2020.

    The ECC was also briefed that under Rule 28 of the Plant Quarantine Rules of 1967 / Plant Quarantine Act 1976, cotton is only allowed through sea route.

    As trade with India is currently suspended by Pakistan, therefore, Afghanistan and the Central Asian states are the more viable economic sources for the import of cotton.

    The ECC allowed import of cotton from Torkham Border subject to fulfillment of all sanitary and phytosanitary (SPS) conditions.

    The ECC also desired that a comprehensive briefing may be given by the Ministry of National food Security and Research on matters pertaining to cotton production for next cotton season.

    It may be noted that during first five months of current financial year, i.e. July-November 2019-20, the value-added readymade garments have increased by 35 percent, knitwear by 6 percent and bedwear by 14 percent in quantity terms as compared to the corresponding period of the previous year.

  • IMF acknowledges Pakistan’s reform program on track: finance ministry

    IMF acknowledges Pakistan’s reform program on track: finance ministry

    ISLAMABAD: The ministry of finance has said that International Monetary Fund (IMF) has acknowledged Pakistan’s reform program on track and business and market confidence is returning.

    In a statement on Sunday, the finance ministry highlighted IMF Board Assessment key economic performance indicators.

    It said that on the completion of first review of Pakistan’s economic performance, IMF has acknowledged that Pakistan’s reform program is on track and already producing results.

    Decisive policy implementation has started to address the deep-seated problems of Pakistan’s economy and to reverse its large imbalances, preserving financial stability.

    The report acknowledges that the business climate has improved, and market confidence is returning.

    IMF further adds in its assessment that the Government recognizes that structural reforms, especially in SoE sector are key to revive economic activity and growth.

    IMF has released SDR 328 million (about $ 452.4 million), bringing total disbursements to SDR 1,044 million (approx $1.45 billion).

    The report has confirmed that End-September performance criteria (PCs) were observed with wide margins. These include

    — Zero budgetary borrowing from SBP

    — Primary budget deficit ceiling

    — Ceiling on government guarantees

    — Zero external public payment arrears

    — SBP net international reserves (NIR), net domestic assets (NDA), and swaps/forwards targets all met

    In addition to above, all structural benchmarks (SBs) for end-September, except the SB on AML/CFT, were completed.

    With regard to inflation outlook, IMF has lowered Inflation projection for FY20 to 11.8 percent, down from 13 percent earlier on account of this fact that the administrative and energy tariff adjustments are expected to offset the effects from weak domestic demand. Thereafter, inflation is expected to converge to 5-7 percent.

    The report confirms that inflation has been started to stabilize, along with core inflation, and the SBP stance is appropriate (no need for further rate hikes).

    However, we are of the view that we will do much better than IMF projection. As inflation during Jul-Nov was 10.8 percent and with measures taken we target to bring inflation down to 5 percent over the medium term.

    With regard to the external sector, significant improvement has been witnessed. Overall, Current Account Deficit (CAD) shrunk by almost two-thirds (74 percent) in the Q1 FY 20 compared to the same period of FY 2019. CAD is projected to decline to 2.4 percent of GDP in FY20 (4.9 percent), which is lower than earlier IMF forecasts of 2.6 percent.

    Total imports fell by 23 percent y-o-y in Q1 of FY2020, but imports of machinery and equipment were more resilient, rising about 2 percent y-o-y. Exports are showing some sign of recovery, up 2 percent y-o-y for the same period with 17 percent volume growth, mainly driven by food and textiles.

    The report states that transition to a market determined exchange rate has allowed the rupee to find its new equilibrium quickly, thereby, successfully correcting the ‘exchange rate overvaluation’ of the last 5 years.

    The report has also acknowledged strong Fiscal performance in the First Quarter of FY2020 while stating Primary surplus of 0.6 percent of GDP and an overall deficit of 0.6 percent of GDP, about 1 percent of GDP better than programmed.

    In addition, Tax revenue growth was in double-digits (net of refunds) even though customs receipts and other external sector related taxes have suffered due to import compression.

    Key Concessions won by Government includes:

    Ceiling on NDA of SBP (Performance benchmark) has been enhanced to Rs 9.1 trn (8.7), an increase of Rs 339 billion in FY20.

    This is positive for growth and will be utilized for concessional financing for the export industry

    Ceiling on government guarantees has been enhanced to Rs 1.8trn (1.6), an increase of Rs 252 billion in FY20

    This is positive for growth and will allow government to settle the outstanding stock of circular debt

    Floor on FBR tax collections for FY20 has been revised lower to Rs 5.2trn (5.5), due to strong improvement in non-tax revenue

    During H1 Fy20, government non tax revenue collection has hit Rs 878 billion which is 75 percent of full year budgeted collection of Rs 1.16 trn.

    This is positive for growth and will ease the burden on public and businesses

    The finance ministry highlighted Current Economic Performance:

    Pakistan economy has witnessed significant improvements in recent months as evidenced from the performance of key economic indicators mentioned below:

    Exchange rate is stable for 5 months, Rupee appreciated by 3.2 percent (Rs/$ 160.1 to 154.89)(20th Dec, 2019), Stock Exchange 100-Index up 20.1 percent since 1st July, 2019 (33,996) to 40,832(20th Dec, 2019) , SBP FX Reserves increase to $ 10.8 billion (13th Dec, 2019), from 7.2 billion (June 2019) , Ease of Doing index up by 28 points (108/190) and World Bank rank Pakistan in Top 10 improvers.

    After 4 years of outflow, total foreign portfolio investment up $ 1.2 billion during Jul-Nov FY20 (-330 million last year). FDI increased to 850 million (477.3 million last year)↑ 78.1 percent. Total foreign investment reached to $2 billion (last year 147 million).

    Similarly, Incorporation of Companies increased 25.8 percent (7,177 from 5,707) during Jul-Nov FY2020.

    FBR tax collection grew by 16.8 percent to Rs 1615.2 billion during July-November, FY2020 against Rs 1382.9 billion last year. Within total FBR tax collection Domestic tax collection grew up 21.5 percent and Import taxes down 2.6 percent (import compression)

    On external side, Exports increased by 4.7 percent to $10.31 billion during July-November, FY2020 against $9.85 billion in the same period last year, while Imports decreased by 21.1 percent to $18.31 billion during July-November, FY2020 against $23.22 billion in the same period last year.

    Consequently, Trade deficit decreased 40.1 percent to $8.002 billion during July-November, FY2020 against $13.36 billion in the comparable period of last year.

    Cement dispatches increased by5.8 percent to 20.462 million ton (15.4million ton). Cement export increased 21.5 percent to 3.608 million ton (2.4 million ton).

    Other Developments include:

    PSDP releases system is accelerated. In this regard ways & means and Finance Division endorsement is eliminated.

    As a major development, PSX becomes best performing market as per Bloomberg in last three months. PSX benchmark KSE 100-Index gained around 10,500 point in last three months.

    Similarly, the Moody’s Investors Service upgraded Pakistan’s credit rating outlook to stable from negative.

    On external front, in the month of November, 2019 Exports increased 11.23 percent to $2.110 billion against $1.897 billion in the same month last year while Imports decreased 13.18 percent to $3.648 billion as compared with $4.202 billion in the comparable period last year.

    In October 2019, on M-o-M, LSM registered a growth 4.01 percent (Sep 1.9 percent), indicating upward trajectory. Cement dispatches increased 10.6 percent in November to 4.35 million ton (3.9 million ton).

    Another important development is that Karkey renegotiated to save Pakistan $ 1.2 billion.

    Circular Debt:

    Monthly flow decreased from Rs 38 billion in July 2019 to about Rs 10 billion. Targeted to be zero next year.

    Strategy for dealing with the stock of debt being finalized.

    Protection for lower end consumers <300 from price rationalization.

    More effective recovery/detection of electricity theft (>50 million).

    Ministry of Energy will issue an additional Rs 250 billion Sukuks (with government guarantee) in FY2020 to retire the CPPA liabilities of the IPPs.

    Compact for Jobs & Growth

    Scale up Affordable Housing devised by Naya Pakistan Housing Authority

    Additional budgetary allocation of Rs 20 billion to 30 billion in FY2020 to cover the 10 percent down payment by beneficiaries of affordable housing. The total impact of this stimulus to the economy would be equivalent to Rs 200 billion to Rs 300 billion.

    Tax Credits equal to 10 percent of the amount of expense related to these projects including labour related costs will be allowed to the developer for the first two years

    Exporter’s package

    Additional credit of Rs 200 billion for exporters under the Export Finance Scheme (EFS) in FY2020

    The interest rate differential (between Kibor and EFS markup) will be paid by additional Rs 10 billion subsidy by the government in FY2020

    This will boost export sector and reduce their cost of doing business

    SBP will give additional Rs 100 billion worth of lending to the exporters, to be subsidized by government through SBP profits.

  • Text of National Accountability (Amendment) Ordinance, 2019

    Text of National Accountability (Amendment) Ordinance, 2019

    ISLAMABAD: A presidential ordinance has been promulgated to restrict National Accountability Bureau (NAB) to take action against matters of tax evasion and an act of government officials done in good faith.

    Following is the text of the amended ordinance

    ===================================================================

    BILL

         further to amend the National Accountability Ordinance, 1999

         WHEREAS it is expedient further to amend the National Accountability Ordinance, 1999 (No. XVIII of 1999), for the purposes hereinafter appearing.

    It is hereby enacted as follows: –

    1. Short title and commencement – This Act may be called the National Accountability (Amendment) Ordinance, 2019.

    (2)  It shall come into force at once.

    1. Amendment of section 4, Ordinance XVIII 1999 – In the National Accountability Ordinance, 1999 (No.XVIII of 1999), the current section 4 shall be substituted with the following provisions namely: –

    “4.  Application

    (1) This Ordinance extends to the whole of Pakistan.

    (2)  Notwithstanding anything contained in this Ordinance, except for the persons, transactions and matters specified in sub-Section (3) of this Section, the provisions of this Ordinance shall apply to all persons, including those persons who are or have been in the service of Pakistan, wherever they may be.

    (3)  The persons, transactions and matters to which the provisions of this Ordinance shall not apply will be as follows: –

    • transactions and matters pertaining to Federal or Provincial taxation, duties, levies or imposts, by whatever name called;

    Explanation

    • All pending inquiries and investigations which relate to matters pertaining to this clause (a) sub-Section (3) of Section 4 shall stand transferred to the respective authorities or departments which administer the relevant laws of taxation, levies or imposts in question by whatever name called;
    • All pending trials which relate to matters pertaining to this clause (a) sub-Section (3) of Section 4 shall stand transferred from the relevant Accountability Courts to the criminal Courts which deal with offences, if any, under the respective laws pertaining to taxations, levies or imposts in question by whatever name called;

    (b)  any private person or matter or transaction in relation to such private person, unless such private persons is alleged to: –

    • have given or offered to give or attempted to give any gratification, other than legal remuneration, or valuable thing or pecuniary advantage to a public officer holder in terms of clauses (i), (ii) and (iv) of Section 9(a) and there is corroborative evidence that the public office holder has materially benefitted by gaining any monetary benefit or asset disproportionate to his known sources of income or which cannot be reasonably accounted, from such private person; or
    • is directly or indirectly connected with the holder of public office as his dependent or benamidar;

    Explanation

    • However, this clause (b) of sub-Section (3) of Section 4 shall not apply in case of an offence falling under clauses (ix), (x) and (xi) of Section 9(a) and clause (xii) of Section 9(a) to the extent that it applies to clauses (ix), (x) and (xi) of Section 9(a).

    (c)  unless a holder of public office has materially benefitted by gaining any monetary benefit or asset disproportionate to his known sources of income or which cannot be reasonably accounted for by the holder of public and there is evidence to corroborate such material benefit, NAB shall not take cognizance of any offence under this Ordinance involving a procedural lapse including any offence specified in clause (vi) of Section 9(a);

    (d)  unless a holder of public office has materially benefitted by gaining any monetary benefit or asset disproportionate to his known sources of income or which cannot be reasonably accounted for, and there is evidence to corroborate such material benefit, NAB shall not take cognizance of any offence involving the rendition of an incorrect act, decision, advice, opinion or report;

    (e)  the valuation of immovable properties, for the purposes of assessing as to whether a holder of public office has assets disproportionate to his known sources of income, shall be reckoned either according to the actual price shown on the relevant title documents or the applicable rate prescribed by the District Collector or the Federal Board of Revenue, which is higher. No evidence contrary to the later shall be admissible.

    1. Amendment of Section 5, Ordinance XVIII 1999 – In the current Section 5 “Definitions” of the National Accountability Ordinance, 1999 (No.XVIII of 1999), after the definition of “PERSON” in clause (o) the following heading will be added namely: –

    “PRIVATE PERSON” shall mean any person other than the holder of public office.”

    1. In the National Accountability Ordinance, 1999 (No. XVIII of 1999), after clause (vi) of sub-section (a) of Section 9, Ordinance XVIII of 1999 the following proviso shall be added, namely: –

    “Provided that an act done in good faith and in discharge of duties and performance of official function shall not, unless there is corroborative evidence of accumulation by the public office holder of any monetary benefit or asset which is disproportionate to the known sources of income or which cannot be reasonably accounted for, constitute an offence under this clause.”

    1. In the National Accountability Ordinance, 1999 (No. XVIII of 1999), after clause (vii) of sub-section (a) of Section 9, Ordinance XVIII of 1999 the following proviso shall be added, namely: –

    “Provided that an act done in good faith and in discharge of duties and performance of official function shall not, unless there is corroborative evidence of accumulation by the public office holder of any monetary benefit or asset which is disproportionate to the known sources of income or which cannot be reasonably accounted for, constitute an offence under this clause.”

    PRESIDENT OF PAKISTAN

  • Law amended to stop NAB taking action against businessmen: Prime Minister

    Law amended to stop NAB taking action against businessmen: Prime Minister

    KARACHI: Prime Minister Imran Khan on Friday said that the government has amended law to restrict National Accountability Bureau (NAB) from taking action against business community.

    Addressing at a ceremony of Pakistan Stock Exchange (PSX), the prime minister said the powers of NAB had been restricted to the corruption cases of public office holders.

    He said that the business community should be free from coercive action of NAB. The other institutions like FBR and courts are there to deal with cases of business community.

    He said that business community has key role in creation of wealth. He further said that no nation can grow without wealth.

    The prime minister said that the wealth creation was only possible when business community was facilitated.

    He said that in the past there was misconception about making of profit. The prime minister said that there was difference between profiteer and profit making.

    The prime minister said that the government desired the businesses should make profit and attract more investment.

    He said that the government was making all out efforts to improve ease of doing business. He said that in the outgoing year the ease of doing business was improved by 27 points despite challenging economic situation.

  • Pakistan’s weekly foreign exchange reserves slip by $60 million

    Pakistan’s weekly foreign exchange reserves slip by $60 million

    KARACHI: The liquid foreign exchange reserves of the country slipped by $60 million to $17.595 billion by week ended December 20, 2019, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $17.655 billion by week ended December 13, 2019.

    The foreign exchange reserves held by the SBP increased by $15 million to $10.907 billion by week ended December 20, 2019 as compared with $10.892 billion a week ago.

    The SBP said that on December 23, 2019, it received $452.4 million from International Monetary Fund (IMF) as second tranche under EFF program.

    These funds will be part of SBP weekly reserves data as of December 27, 2019, to be released on January 02, 2020.

    The foreign exchange reserves held by commercial banks fell by $75 million to $6.688 billion as against $6.763 billion a week ago.

  • Investors of saving schemes to explain source of income

    Investors of saving schemes to explain source of income

    ISLAMABAD: Investors of National Saving Schemes (NSS) will explain source of income for their existing investments under ongoing drive of the government to check money laundering and terror financing.

    The ministry of finance last week issued draft National Savings Schemes (AML and CFT) Rules, 2019 to document the investment and identify links of investments to Money Laundering and Terror Financing.

    Under the rules the Central Directorate of National Savings (CDNS) will conduct customers due diligence (CDD) of all existing and new investors of NSS.

    The customers will require to provide source of earnings for the investment and their annual income.

    Currently CSNS has 4 million customers and the total investment has increased to around Rs4 trillion by October 2019.

    According to the draft rules: Every customer, whether permanent or occasional and whether natural or legal person or legal arrangement, shall be identified for establishing business relationship and for the purpose following information shall be obtained, verified using reliable, independent source documents, data or information and recorded namely: –

    (a) full name as per identity or registration documents;

    (b) national identity card, passport, national identity card for overseas pakistanis, Pakistan origin card or alien registration card number, etc.

    (c) registration or incorporation number of business, if applicable;

    (d) residential address, telephone numbers and e-mail, if available;

    (e) business address, telephone numbers and e-mail, if available;

    (f) date of birth;

    (g) date and place of registration or incorporation of business, if applicable;

    (h) nationality

    (i) place of birth;

    (j) national tax number (NTN), if applicable;

    (k) nature of business and location, if applicable;

    (l) sources of earnings;

    (m) customer’s net worth in respect of legal persons, legal arrangements and high risk customers; and

    (n) annual income.

  • IMF board approves $452.4 million as second tranche for Pakistan

    IMF board approves $452.4 million as second tranche for Pakistan

    KARACHI: International Monetary Fund (IMF) in its board meeting held on December 19, 2019 approved second tranche of about $452.4 million under its total $6 billion loan program for Pakistan.

    The Executive Board of the IMF on December 19, 2019 completed the first review of Pakistan’s economic performance under the Extended Fund Facility (EFF).

    The completion of the review will allow the authorities to draw SDR 328 million (about US$ 452.4 million), bringing total disbursements to SDR 1,044 million (about US$ 1,440 million), said a press release issued by the IMF.

    The Fund observed that Pakistan’s economic reform program is on track. Decisive policy implementation by the Pakistani authorities is helping to preserve economic stability aiming to put the economy on the path of sustainable growth.

    Transition to a market-determined exchange rate has been orderly; inflation has started to stabilize, mitigating the impact on the most vulnerable groups of the population.

    The Pakistani authorities remain committed to expanding the social safety nets, reducing poverty, and narrowing the gender gap, the IMF said.

    The Executive Board approved the 39-month, SDR 4,268 million (about $6 billion at the time of approval of the arrangement, or 210 percent of quota) EFF for Pakistan on July 3, 2019.

    Following the Executive Board’s decision, David Lipton, First Deputy Managing Director and Acting Chair, issued the following statement:

    “Pakistan’s program is on track and has started to bear fruit. However, risks remain elevated. Strong ownership and steadfast reform implementation are critical to entrench macroeconomic stability and support robust and balanced growth.

    “The authorities are committed to sustaining the progress on fiscal adjustment to place debt on a downward path. The planned reforms include strengthening tax revenue mobilization, including the elimination of tax exemptions and loopholes, and prudent expenditure policies. Preparations for a comprehensive tax policy reform should start early to ensure timely implementation. Enhanced social safety nets will help alleviate social costs and build support for reforms.

    “The flexible, market-determined exchange rate remains essential to cushion the economy against external shocks and rebuild reserve buffers. The current monetary stance is appropriately tight and should only be eased once disinflation is firmly entrenched. Strengthening the State Bank of Pakistan’s autonomy and governance will support these efforts.

    “Faster progress is needed to improve the AML/CFT framework, supported by technical assistance from the IMF and other capacity development providers. Swift adoption of all the necessary measures is needed to exit the FATF’s list of jurisdictions with AML/CFT deficiencies.

    “The authorities have adopted a comprehensive plan to address the accumulation of arrears in the power sector. Its full implementation is key to improve collection, reduce losses, and enhance governance. Timely and regular adjustment of energy tariffs will bring the sector in line with cost recovery.

    “Efforts are ongoing to further improve the business environment, strengthen governance, and foster private sector investment. Reform of the state-owned enterprise sector will help put Pakistan’s public finances on a sustainable path and have positive spillovers by leveling the playing field and improving the provision of services.”

  • Pakistan’s forex reserves increase to $17.655 billion

    Pakistan’s forex reserves increase to $17.655 billion

    KARACHI: The liquid foreign exchange reserves of the country have increased by $1.607 billion, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves increased to $17.655 billion by week ended on December 13, 2019 as compared with $16.048 billion a week ago.

    The foreign exchange reserves of the central bank increased $1.659 billion to $10.892 billion by week ended December 13, 2019 as compared with $9.233 billion a week ago.

    The reserves held by the commercial banks declined nominally to $6.762 billion by December 13, 2019 as compared with $6.814 billion a week ago.

  • SECP, universities sign MoU to promote financial literacy

    SECP, universities sign MoU to promote financial literacy

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has signed Memorandums of Understanding (MOU) with five leading universities to promote financial literacy among youths.

    SECP’s Commissioner Investor Education Department, Shaukat Hussain inked the MoUs, said a statement on Tuesday.

    While universities were represented by their respective Vice Chancellors, Registrars and Directors.

    These HEC recognized universities included University of Balochistan, Mehran University of Engineering and Technology Jamshoro, University of Wah, Forman Christian University Lahore and University of Malakand. Including these five MOUs, SECP’s total number of active MOUs with various institutions under its investor education program ‘Jamapunji’ reached 51, giving it leverage of an ever increasing network of partners for spreading investor awareness.

    Talking at the occasion, Shaukat Hussain emphasized on the importance of collaborative efforts between the regulator and the educational sector to enable a more aware and responsible financial ecosystem in Pakistan.

    He mentioned SECP’s efforts leading to 28 places jump in the World Bank’s Ease of Doing Business Index, making Pakistan among the top 10 countries with the most improved business climate.

    He lauded each of these universities for their established Offices of Research, Innovation and Commercialization (ORICs), which encourage and facilitate aspiring student entrepreneurs.

    The Commissioner apprised participants of SECP’s dedicated Startup Portal and ongoing collaboration with various National Incubation Centers across Pakistan.

    He informed participants that SECP is member of HEC’s National Curriculum Revision Committees (NCRC) and providing due input in improving ‘ Economics’ and ‘ Business Administration’ tertiary level curricula.

    He was of the view that a curricula with components of capital markets, insurance sector and basics of financial literacy would help in producing astute entrepreneurs.

    The representatives appreciated SECP’s efforts for cultivating financial literacy.

    Under the MoU, SECP will be holding regular seminars at universities on a continuing basis to impart knowledge to students on the basics of savings, financial planning, investing and capital markets.

    Visiting university delegates committed to extending their full support through their vast network of colleges and campuses, radio channels, faculty resources, infrastructure and premises, information exchange etc., to make meaningful impact hand in hand with SECP.