Category: Finance

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Pakistan to stay on FATF grey list till onsite visit

BERLIN: Pakistan will stay on the grey list despite making compliance to all the action plans set by the Financial Action Task Force (FATF). An onsite visit to Pakistan is required to verify the implementation of the country, a statement issued on Friday by the watchdog said.

However, Pakistan has not been officially removed from the FATF’s grey list.

READ MORE: FATF retains Pakistan in grey list; admits progress

The watchdog said that FATF will “monitor the COVID-19 situation and conduct an on-site visit at the earliest possible date”.

The FATF officials will hold a press briefing shortly on the outcomes of the four-day plenary session of the watchdog that reviewed Pakistan’s action plans.

READ MORE: Pakistan urges FATF to take action against Indian plot

A government official had earlier said in a conversation with the BBC that matters will take seven to eight months to settle even after Pakistan has made its way out of the watch list as the FATF team will visit Pakistan for an inspection.

READ MORE: Pakistan likely to exit from FATF’s grey list

Pakistan had launched a massive diplomatic effort to get off the FATF grey list. Minister of State for Foreign Affairs Hina Rabbani Khar, who is also the chair of Pakistan’s National FATF Coordination Committee, is leading the Pakistan delegation at the plenary meeting that started on June 14, 2022.

READ MORE: Pakistan complies with 31 requirement of FATF

June 17, 2022
Foreign Investment into Pakistan plunges by 59% during 11MFY22

KARACHI: Total foreign investment into Pakistan has declined by 59 per cent to $1.59 billion during first 11 months (July – May) of fiscal year 2021/2022, according to data released by the State Bank of Pakistan (SBP) on Friday.

The inflows of foreign investment into the country were $3.85 billion during the corresponding period of the last fiscal year.

READ MORE: Foreign investment falls by 57% in 10MFY22: SBP

Total foreign private investment recorded a 12.5 per cent decline to $1.22 billion during 11 months of the current fiscal year as compared with $1.39 billion in the same months of the last fiscal year.

Foreign Direct Investment (FDI), the major component of the foreign private investment, fell by 5 per cent to $1.68 billion during the months under review as compared with $1.6 billion in the corresponding period of the last fiscal year.

READ MORE: Foreign investment into Pakistan surges by 131%

The portfolio investment, the other component of the foreign private investment, has recorded a fall of 32.3 per cent during the period. The investment in the capital market recorded an outflow of $378 million during July – May 2021/2022 as compared with outflow of $286 million in the same period of the last fiscal year.

READ MORE: Foreign investment surges by 176% during July – January

The inflow in debt securities under foreign public investment was $367 million during first 11 months of the current fiscal year as compared with $2.46 billion in the same months of the last fiscal year.

READ MORE: Pakistan’s foreign investment surges by 73% in 5 months

June 17, 2022
Pakistan’s central bank reserves shrink to one month import cover

KARACHI: The official reserves of Pakistan’s central bank have declined to provide about one month import cover, according to official data released on Thursday.

The official foreign exchange reserves of the State Bank of Pakistan (SBP) fell by $241 million to $8.985 billion by week ended June 10, 2022 as compared with $9.226 billion a week ago i.e. June 03, 2022.

READ MORE: SBP’s forex reserves slip 2½-year low to $9.226 billion

The present level of the SBP’s reserves showed that the central bank has import cover for around only one months.

Pakistan’s import bill for the month of May 2022 recorded at $6.777 billion, according to Pakistan Bureau of Statistics (PBS).

The latest foreign exchange reserves of the SBP showed it fell around 2½ years low. Previously, the foreign exchange reserves held by the central bank were seen at $9.233 billion on December 6, 2019.

The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021.

READ MORE: SBP’s forex reserves fall two-year low to $9.72 billion

Since touching the peak the central bank’s foreign exchange witnessed a continuous decline. The official reserves of the SBP fell around $11.16 billion by week ended June 10, 2022 from touching the peak on August 27, 2021.

The country is facing serious balance of payment crisis during the past many months. The foreign exchange reserves of the central bank have seen a constant decline.

The falling foreign exchange reserves also put pressure on the local currency. The Pakistani Rupee (PKR) is also depreciating to record low against the US dollar on daily basis.

The rupee fell to a fresh historic low at Rs207.67 to the dollar at interbank foreign exchange closing on June 16, 2022.

READ MORE: Moody’s changes Pakistan’s outlook to negative

The country was expecting inflows from various sources but so far those were not materialized so far. The country also making all efforts to resume IMF program to obtain about $ 1 billion next tranche under Extended Fund Facility (EFF).

The total foreign exchange reserves of Pakistan have declined to around three-year low at $14.94 billion by week ended June 10, 2022. Previously, the foreign exchange reserves of the country were seen at $14.86 billion by week ended July 19, 2019.

The country’s foreign exchange reserves have fallen by $233 million to $14.943 billion by week ended June 10, 2022 as compared with $15.176 billion a week ago i.e. June 03, 2022.

READ MORE: Pakistan’s headline inflation up by 13.8% in May 2022

The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $12.285 billion.

The foreign exchange held by commercial banks however slightly up by $8 million to $5.958 billion by week ended June 10, 2022 as compared with $9.226 billion a week ago.

June 17, 2022
Punjab presents Rs3.226 trillion budget 2022/2023

LAHORE: Punjab government on Wednesday presented its budget 2022/2023 with an outlay of Rs3.226 trillion. Presenting the budget, Finance Minister, Sardar Owais Ahmad Khan Leghari said the total volume of the budget is 22 percent more than current fiscal year, out of which Rs1.712 billion have been allocated for Current Expenditures.

He said that total estimated Revenue for next fiscal year is 2521.29 billion rupees, while the province will get over 2020 billion rupees from the Federal Divisible Pool.

The Minister said Rs435.87 billion have been allocated for salaries, Rs312 billion for pensions while Rs528 billion for Local Governments.

The Finance Minister said no new tax has been levied in next fiscal year on account of Sales Tax on Services. He said Stamp Duty ratio has been proposed to enhance from current one percent to 2 percent to raise provincial revenue.

Owais Leghari said 35 percent of the Annual Development Program amounting to 240 billion rupees has been allocated for South Punjab, which will be spent on development projects.

June 15, 2022
Indonesia resumes palm oil shipment to Pakistan

ISLAMABAD: Indonesia has started palm oil shipment to Pakistan after promulgation of new export regulation, a statement said on Tuesday.

On the request of Pakistan, Indonesian minister assured that after completing the necessary formalities, the first shipment of palm oil to Pakistan was expected to sail within 24 hours.

The minister further stated that he would ensure that the first shipment leaves the Indonesian port by the next day. The minister also assured that Pakistan would be the first country to which the commodity will be exported, after the promulgation of new export regulations.

READ MORE: Tarin orders release refunds to edible oil importers

Upon the special instruction of Prime Minister Muhammad Shehbaz Sharif, Federal Minister for Industries and Production Makhdoom Syed Murtaza Mahmud led a delegation to Jakarta from 12- 14 June 2022.

The objective of the visit was to minimize the impact of the recent decision of the Government of Indonesia to ban the export of Palm oil on Pakistan’s economy and ensure the steady flow of the commodity in the Pakistani market, Pakistan is the third-largest importer of Indonesian Palm Oil.

In 2021, Pakistan had imported 2.78 million tonnes of Palm oil from Indonesia. During the visit, Minister Syed Murtaza Mahmud met with the Indonesian Minister of Trade Muhammad Lutfi, Minister of Industry Agus Gumiwang Kartasasmita Coordinating Minister of Maritime and Investment Affairs, Luhut Binsar Panjaitan, and Minister of Industries, Agus Gumiwang Kartasasmita.

Representatives of the largest Palm oil exporters to Pakistan and the Chairman of the Indonesian Palm Oil Association also called on the Minister.

In his interaction with the Indonesian Minister of Trade, while highlighting the strong historical and brotherly relations between Pakistan and Indonesia, Minister Mahmud underscored that Pakistan, being the third – largest market for Indonesian palm oil, was heavily dependent on Indonesian palm oil.

He sensitized the Indonesian minister of the situation of edible oil in Pakistan and mentioned that Indonesia’s decision to ban palm oil export for a month had adversely affected the stocks of edible oil in Pakistan. Even after the ban had been lifted on 23 May 2022, the exporters are still facing regulatory and logistical bottlenecks.

He urged his Indonesian interlocutor to facilitate the earliest possible resumption of palm oil shipments to Pakistan by removing the bottlenecks.

In response, the Indonesian Minister assured that Indonesia attached great importance to its relations with Pakistan and was ready to ensure an uninterrupted flow of Indonesian Palm Oil to Pakistan.

He further stated that after completing the necessary formalities, the first shipment of palm oil to Pakistan was expected to sail within 24 hours.

The Minister further stated that he would ensure that the first shipment leaves the Indonesian port by the next day.

The Minister also assured that Pakistan would be the first country to which the commodity will be exported, after the promulgation of new export regulations.

Both the ministers discussed bilateral economic and trade relations. Minister Mahmud underscored the urgency of bridging the huge trade imbalance between the two countries.

The two Ministers identified SMEs, agriculture, tourism, industrial joint ventures, and other non – traditional sectors as possible areas of collaboration.

Minister Lutfi agreed to visit Pakistan to discuss these issues with his Pakistani counterpart. During his meeting with Coordination Minister Luhut Binsar Panjaitan who has been assigned by President Jokowi to coordinate local distribution and export of Palm oil, Minister Mahmad underscored the need to ensure uninterrupted delivery of the commodity to Pakistan.

Minister Luhut promised to make sure that the delivery of Palm Oil to Pakistan in resumed at the earliest. He further stated that he has directed to ensure steady flow to the commodity in the future.

Minister Mahmud and his Indonesian counterpart, Agus Chumiwang Kartasasmita exchanged views on bilateral cooperation in the industrial sectors, particularly in the production of e-vehicles, cell phones, electronics, and agro – based Industries.

The Minister highlighted the potential of investment in Pakistan in various sectors, and opportunities emerging from SEZa and invited the Indonesian businessmen and entrepreneurs to invest in Pakistan.

The Minister also invited his Indonesian counterpart to visit Pakistan, which was accepted.

The visit of Minister Mahmud was timely to secure the resumption of the export of Indonesian Palm Oil to Pakistan and avoid a shortage of the commodity in the market.

Due to the Minister’s personal intervention, two shipments of Palm Oil carrying 30,000 and 27,000 would leave for Pakistan today.

Another 8 shipments are expected to reach Karachi before the end of June 2022 14 June 2022, says a press released received here today from Jakarta on 14 June 2022.

June 15, 2022
Sindh announces tax relief measures in budget 2022-2023

KARACHI: The province of Sindh has announced sales tax relief measures in the budget 2022-2023 presented in the provincial assembly on Tuesday.

Sindh Chief Minister Syed Murad Ali Shah announced a number of measures to facilitate taxpayers in payment of sales tax on services.

READ MORE: Sindh increases salary by 15% from July 1, 2022

He said relief to public has been provided by extending existing measure to ensure that relief continues to reach common man. For this purpose;

Exemption from SST is being proposed on toll manufacturing services.

READ MORE: Sindh unveils Rs1.714 trillion budget for 2022/2023

5 per cent reduced SST rate for “Recruiting Agents” will continue for next two years i.e. up to 30th June, 2024. This relief is proposed for Pakistanis aspiring to work overseas.

Services provided by Cable TV Operators are levied at a reduced rate of 10 per cent, the existing relief is proposed to be extended for a further period of two years ending on 30th June, 2024.

Whereas, the following cable TV operators are proposed to be exempt:

a) Cable TV Operators in rural areas under PEMRA License of “R” Category to be exempt from SST till 30th June, 2023.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

The rate of SST on commission charges received by food delivery channels (i.e. Foodpanda, Cheetay Logistics, etc.) from Home Chefs is proposed to be reduced from 13 per cent to 8 per cent for a period of two (2) years ending on 30th June, 2024. This relief is proposed in order to encourage small scale businesses. In all other cases, the services provided or rendered by Commission Agents shall continue to be liable to SST at 13 per cent.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

The existing exemption on health insurance services is proposed to continue further for a period of one year till 30th June, 2023.

GIZ, a German development agency, facilitating development projects in Sindh, is proposed to be granted conditional exemption on Sales tax on services as indirect relief to the Public.

June 14, 2022
Sindh increases salary by 15% from July 1, 2022

KARACHI: The Sindh government on Tuesday announced a 15 per cent raise in salary of provincial government employees and 5 per cent increase in pension effective from July 01, 2022.

Sindh Chief Minister Syed Murad Ali Shah announced raise in pay and pension while presenting the provincial budget 2022-2023.

READ MORE: Sindh unveils Rs1.714 trillion budget for 2022/2023

The chief minister announced various relief measures for employees and pensioners during next fiscal year.

He said Adhoc Relief Allowances 2016, 2017, 2018, 2019 and 2021 at the rates admissible to employees of Federal Government are being merged and Revised Basic Pay Scale 2022 for Civil Servants of Government of Sindh is being introduced on the pattern of Federal Government.

Adhoc Relief Allowance at the rate of 15 per cent of Basic Pay Scales to Civil Servants of Government of Sindh w.e.f. 1st July 2022 is proposed.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

Disparity Allowance at the rate of 33 per cent of Basic Pay will be paid to Civil Servants in BPS-1 to 16 and at the rate of 30 per cent to Civil Servants in BPS-17 and above in lieu of the differential rate of Ad-hoc Relief Allowances 2013, 2015, 2016, 2017, 2018, 2019, 2020 & 2021, which are being abolished w.e.f 1st July, 2022.

Pensioners of Government of Sindh were already getting 22.5 per cent more increase in net pension than pensioners of Federal Government till February 2022. Therefore, an increase at the rate of 5 per cent of net pension will be paid to the pensioners of the Sindh Government w.e.f 1st July, 2022.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

Thus, after announcement of 10 per cent increase in net pension by Federal Government in March 2022 and enhancement of the rate of increase to 15 per cent from 1st July 2022, the pensioners of Government of Sindh will still be getting 12.5 per cent more of net pension than the pensioners of Federal Government.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

June 14, 2022
Sindh unveils Rs1.714 trillion budget for 2022/2023

KARACHI: Syed Murad Ali Shah, Chief Minister of Sindh on Tuesday presented provincial budget 2022-2023 with total outlay of Rs1.714 trillion.

The province estimated the deficit budget amounting Rs33.85 billion for the next fiscal year.

READ MORE: Khyber Pakhtunkhwa raises salary, pension by 15%

The chief minister said that the total budget outlay for Financial Year 2022-2023 is estimated at Rs.1.714 trillion, as against budget estimate of Rs.1.478 trillion for 2021-2022, showing overall increase of 15.9 per cent.

The current expenditure of the province is projected at Rs.1.254 trillion, which includes current revenue expenditure of Rs. 1.199 trillion and current capital expenditure of Rs.54.5 billion.

This is 73.2 per cent of total expenditure of the province and shows an increase of 9.1 per cent in comparison to the current expenditure for last year that was Rs.1.148 trillion.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

The chief minister said that for the next financial year, size of development budget will be Rs459.658 billion as compared to Rs. 329.033 billion in year 2021-2022, that will include Rs. 332.165 billion for Provincial Annual Development Plan (ADP) and Rs.30.00 billion for Districts ADP.

Foreign project assistance of Rs.91.468 billion from the development partners and Rs.6.025 billion are expected from Federal PSDP grant for schemes being executed by Government of Sindh.

Murad Ali Shah said shift in federal priorities during last four years caused the people of the second largest province face deprivation due to lack of infrastructure development and non-provision basic health facilities in rural areas.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

“Despite these difficulties we maintained our resolve towards our development objectives,” he added.

Hence, next year’s ADP will include schemes to provide basic facilities to the marginalized segments of society. More resources are being allocated for water and sanitation, road network, transport, health and education sectors to provide maximum relief to the common people in the next year’s ADP.

There are 2,506 ongoing schemes with allocation of Rs. 253.146 billion being 75 per cent of total ADP.

There are 1,652 new schemes with allocation of Rs.79.02 billion being 25 per cent age of total ADP

On-Going schemes where more than 70 per cent expenditure is made, have been fully funded for completion by June, 2023.

More than 1,510 schemes have been fully funded and are expected to be completed in next financial year 2022-23.

READ MORE: Pakistan massively increases taxation on motor vehicles

Allocation for Education Sector schemes is Rs. 34.22 billion (10.2 per cent of the total size).

Allocation for Health Sector schemes is Rs. 23.33 billion (6.5 per cent of the total size).

Allocation for Water and Sanitation Sector (PHE & LG) is Rs. 59.36 billion (18 per cent of the total size).

Allocation for Agriculture & Livestock sector is Rs 10.2 billion (3 per cent of total size)

Allocation for Irrigation including lining is Rs. 32.5 billion (12 per cent of the total size).

Allocation for Transport & Communication (Road under W&S and LG) sector is Rs. 100.64 billion (30 per cent of the total size).

Allocation for Karachi based schemes is Rs. 118 billion, Rs.72 billion under ADP, Rs. 5 billion under District ADP and Rs. 41 billion through Foreign Project Assistance.

Keeping in view the above non-development and development expenditure priorities, the major milestones of our objectives are:

READ MORE: New rates of capital gain tax on disposal of securities

Provide infrastructure to educational institutions for increased enrolment.

Improve and Upgrade health facilities and manage available health institutions

Provide nutrition support, community infrastructure funds, income generating grants, micro assets, and low cost housing for reducing poverty of poorest of the poor.

Increase agricultural productivity and value chain, Conservation of water for agriculture, industrial and municipal consumption.

Provide clean drinking water and safe disposal of sewerage.

Improve connectivity between major cities and towns of province.

Increase road connectivity and planned mass transit for Karachi city.

June 14, 2022
FBR constitutes anomaly committees for Finance Bill 2022

ISLAMABAD: The Federal Board of Revenue (FBR) on Tuesday constituted committees to remove anomalies in the Finance Bill, 2022.

The FBR formed two separate committees i.e. technical and business to take input from stakeholders.

READ MORE: FBR to disable mobile SIMs on non-filing of tax returns

Term of Reference (TOR) is to: review the anomalies identified and submitted; and to advise FBR on removal of anomalies.

The technical anomaly committee will be headed by Ashfaq Tola, FCA FCMA and co-chair by Ms. Suraiya Ahmed Butt, Member (Customs-Policy), FBR and Afaque Ahmed Qureshi, Member (IR-Policy), FBR.

READ MORE: Pakistan amends tax laws to legalize money transfers

The other members of the technical companies are: Asif Haroon, A F Ferguson & Co. Karachi; Abdul Qadir Memon, Patron Pakistan Tax Bar, Karachi; Muhammad Aurangzeb, Chairman, Pakistan Business Council, Karachi; Sadia Nazeer, FCA, Partner KPMG, Islamabad; Habib Fakharuddin CA, Rawalpindi; Saifullah, Partner Rafaqat Babar & Co. / Vice President ICAP, Peshawar; and Kamal Hassan Siddiqui, Balochistan Tax Bar, Quetta.

The business anomaly committee will be headed by Zubair Motiwala and co-chair by Ms. Suraiya Ahmed Butt, Member (Customs-Policy), FBR and Afaque Ahmed Qureshi, Member (IR-Policy), FBR.

READ MORE: Collectors empowered to determine customs valuation

The other members of anomaly committee-business are: Irfaq Iqbal Sheikh, President, Federation of Pakistan Chamber of Commerce and Industry (FPCCI); Mian Nauman Kabir, President, Lahore Chamber of Commerce and Industry (LCCI); Hasnain Khurshid Ahmad, President, Sharhad Chamber; Fida Hussain Dashti, president, Quetta Chamber; Muhammad Shakeel Munit, President, Islamabad Chamber of Commerce and Industry (ICCI); Ehsan A Malik, CEO, Pakistan Business Council; Syed Anis Ahmed, President, American Business Council; Abdul Rahim Nisar, Chairman, All Pakistan Textile Mills Association (APTMA); Khurram Mukhtar, Patron-in-Chief, PETA; and Abdul Aleem, Secretary General, Overseas Investors Chamber of Commerce and Industry.

The FBR asked both the committees to submit their recommendations by June 20, 2022.

READ MORE: FBR assigned tax collection target of Rs7 trillion in 2022/2023

June 14, 2022
Khyber Pakhtunkhwa raises salary, pension by 15%

PESHAWAR: Khyber Pakhtunkhwa on Monday announced 15 per cent increase in salary of provincial government employees and 15 per cent increase in pension as well.

Finance Minister Taimur Salim Jhagra announced the increase in salary and pension of provincial employees while presenting the provincial budget 2022-2023.

READ MORE: Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

The minister announced Rs15 percent increase in salaries and pension of all the government employees, Rs15 percent ad-hoc relief allowance, adding the increase for grade1-19 employees besides DRA allowance.

He said risk allowance of police officials from grade 7-16 have been increased and was brought at par of DRA in line with the police martyrs package.

The Finance Minister Taimur Salim Jhagra said that Rs447.9 billion would be spent on salaries including Rs372.1 billion in settled districts and Rs75.8 billion through merged tribal districts while Rs107 billion on pension including Rs106 billion in settled districts and Rs one billion in merged tribal districts.

READ MORE: Advance tax on immovable property purchase enhanced to 250% for non-filers

He said 100 percent increase in pension expenditure have been witnessed in last couple of years, adding expenditure of pensions, which was only one percent of total KP budget expenditure in 2003-04 ie Rs0.87 billion has jumped to 14.7percent ie Rs90 billion in 2021-2022.

READ MORE: Pakistan massively increases taxation on motor vehicles

He said amendment in KP Civil Servant Act 1973 has been made under which contributory and provident fund were increased for newly recruited employees under contributory pension scheme under which either lumsum amount one time or long terms investment offer would be given to retired employees.

As many as services of 63,0000 employees would be regularized including 675 adhoc doctors from July 1, 2002, regularization of 58,0000 teachers and 4079 employees of 128 projects of erstwhile Fata during 2022-2023.

READ MORE: New rates of capital gain tax on disposal of securities

June 14, 2022