Category: Finance

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Khyber Pakhtunkhwa presents Rs1.33 trillion budget 2022-2023

PESHAWAR: Khyber Pakthunkhwa government on Monday presented Rs1.332 trillion budget for fiscal year 2022-2023.

The budget included an allocation of Rs1.11 trillion for settled districts and Rs223.1 billion for merged tribal districts.

Presenting its fourth budget at Khyber Pakthunkhwa Assembly floor, Finance Minister Taimur Salim Jhagra said that the volume of the current budget is Rs913.8 billion including Rs789.8 billion for settled districts and Rs124 billion for merged tribal districts.

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

He said total development budget of Khyber Pakthunkhwa was Rs418.2 billion including Rs319.2 billion for settled districts and Rs99 billion for merged tribal districts.

Regarding revenue and receipts collection, the minister said that total receipts was estimated at Rs1,332 billion including Rs750.9 billion to be collected from federal taxes receipts and Rs68.6percent as one percent share of divisible pool on war on terror.

He said Rs31 billion would be collected through oil and gas royalty and surcharge and Rs61.9 billion through net hydel power in accordance of MoU 2015-16 and arrears.

READ MORE: Pakistan massively increases taxation on motor vehicles

The minister said Rs85 billion would be collected through provincial tax and non-tax revenue, Rs4.3 billion under the head of foreign program assistance (FPA) for settled districts and Rs208.7 billion grant for merged tribal districts besides Rs212.7 billion receipts through other resources.

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.

Besides salaries, he said Rs247.4billion would be spent on O&M, emergency and district expenditures, Rs111.4 billion on others current expenditures while volume of provincial development program including accelerated development program budget was Rs241 billion including Rs185 billion for settled districts and Rs56 billion for merged tribal districts while volume of total development budget was Rs383.5 billion including 319.2 billion for settled districts and Rs64.3billion for merged tribal districts.

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

Under foreign program assistance, Rs93.2 billion would be spent including Rs88.9 billion for settled districts and Rs4.3 billion for merged tribal districts while 8.3 billion would be received through Public Sector Development Program for settled districts of Khyber Pakthunkhwa.

The Minister said that Rs26,458 million would be spent on agriculture, Rs4191 on Aukaf, Religious Affairs, Rs73 million on Bureau of Statistics, Rs71653 million on communication and works, Rs227,087 million for elementary and secondary education, Rs29203 million on energy and power,

Rs4191 million for environment, Rs1607 million for excise and taxation, Rs32,446 million through finance, Rs6433 million through forestry, Rs6655 million through general administration, Rs205,725 million for health, Rs34,191 million through higher education, Rs101,572 million for home and Rs823 million for housing sectors.

READ MORE: Pakistan slaps 45% corporate tax on banks

Likewise, Rs4926 million were allocated for industries, Rs1808 million for information and public relations, Rs2990 million for information technology, Rs25725 million for irrigation, Rs1033 million for labour, Rs14377 million for law and justice, Rs22337 million for local government, Rs1426 million for mines and mineral, Rs64372 million for planning and development,

Rs3616 million for population welfare, Rs23071 million for public health engineering, Rs30003 million for relief, rehabilitation and settlement, Rs3045 million revenue and estate, Rs6068 million for social welfare, Rs22017 million sports, culture and tourism, Rs2849 million through technical education, Rs12151 million for transport and Rs392 million for Zakat and Usher.

Finance Minister Taimur Salim Jhagra said health department budget has been increased by Rs55 billion, elementary and secondary education by Rs47 billion, police by Rs14 billion and energy and power by Rs11 billion.

The Minister announced Rs15percent 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.

Transport monetization and vehicle leasing policy, change of executive allowance to performance allowance, work from home on Fridays and introduction of fleet cards to save fuel and reduce risk of pilferage across all departments announced.

Taimur Salim Jhagra 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 2021-22.

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 2022-23.

OPD services under Sehat Card Plus program would soon be launched in all Govt hospitals and patient can available free treatment up to Rs10 million, he said adding Rs25 billion were allocated for Sehat Plus Card through eight lakh patients were benefited during 2021-22.

Following inclusion of liver transplant, he said five more chronic diseases including bone marrow transplant, sclerosis, cochlear implants, thalassemia and advance cancer coverage would be included in Sehat Card for which Rs2.5billion were allocated. He said that Rs53.6 billion earmarked for MTIs, allied and medical hospitals in Khyber Pakthunkhwa.

Four new medical colleges at Dir, Buner, Charsadda and Haripur would be established besides setting up of four new MTIs at Fountains House Peshawar, Kohat Institute of Medical and Dental Sciences, DHQ Charassadda and Women Children Hospital and DHQ Haripur.

As many as Rs3 billion were set aside for revamping of secondary care and service delivery while renovation of rehabilitation of 32 hospitals were completed.
Besides allocation of Rs2.7 billion for 58 hospitals in 24 districts for secondary care hospital under Public Private Partnership, he said that 3000 more beds would be established while primary care revamping program carrying allocation Rs2125 million was producing excellent results.

He said renovation of 700BHUs and RHCs costing Rs82.4 billion have been started while renovation of 500 facilities completed. He said Rs2 billion allocated for strengthening of 15 BHUs and RHCs in 15 districts provision of better services to people.

He said Rs10 billion would be spent on provision of free medicines to people besides allocation of Rs500 million for LHS and LHWs in addition to 3500 additional LHWs recruitment and additional funds of Rs one billion funds for arrangements regarding eradication of polio in Bannu and Dera Ismail and Rs1.3 billion for launching of maternal ambulance service.

Taimur Jhagra said KP Govt has decided to maintain tax rates of fiscal year 2021-22, adding 20pc relaxation would be provided for re-registration of motor vehicles or first registration and there would be not tax on land with full exemption from capital value tax (CVT) and registration fee.

He announced students of elementary and secondary education are exempted from fee and exempted library, archives and hostels fees. The Minister claimed that tax rates of Khyber Pakthunkhwa Revenue Authority was minimum than other provinces of Pakistan.

He said PFM (Public Financial Management) law was being introduced under Article 119 of the Constitution for bringing more transparency in the financial system. Insaf Food Cards program has been introduced under which Rs26 billion targeted subsidy would be provided to one million families of KP.

June 13, 2022
Massive cut in subsidies to curtail current expenditures

ISLAMABAD: Pakistan has announced massive cut in subsidies and allocated an amount of Rs699 billion for the fiscal year 2022/2023 as compared with the amount of Rs1.515 trillion in the outgoing fiscal year.

The drastic cut in subsidies has been aimed at curtailing current expenditures to reduce the fiscal deficit.

READ MORE: Petroleum levy to generate Rs750 billion

Pakistan on June 10, 2022 presented its federal budget 2022/2023 which estimated current expenditure at Rs8.69 trillion during the next fiscal year as compared with estimated Rs8.516 trillion in the outgoing fiscal year.

An amount of Rs3.95 trillion has been allocated for mark-up payments for the fiscal year 2022/2023 as against Rs3.14 trillion in the outgoing fiscal year.

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

A whopping Rs3.44 trillion has been earmarked for mark-up payment on domestic debt during the next fiscal year as compared with Rs2.77 trillion in the current fiscal year. Meanwhile, an amount of Rs511 billion has been allocated for mark-up payment on foreign debt during next fiscal year.

The government estimated an amount of Rs530 billion for payment of pension during the next fiscal year. This amount includes Rs395 billion for the pension of military persons and Rs135 billion for the pension of civil employees.

READ MORE: Budget 2022/2023: Salient features of customs duty act

The government allocated an amount of Rs1.52 trillion for defence affairs and services during fiscal year 2022/2023 as compared with the estimated amount of Rs1.48 trillion in the outgoing fiscal year. The actual allocation was Rs1.37 trillion for the fiscal year 2021/2022.

An amount of Rs100 billion has been allocated for pay and pension during the next fiscal year.

READ MORE: Budget 2022/2023: Salient features of sales tax

The government earmarked an amount of Rs550 billion for running of civil government during fiscal year 2022/2023 as compared with Rs530 billion in the current fiscal year. The actual allocation for running of civil government was Rs479 billion in fiscal year 2021/2022.

June 11, 2022
Government employees get 15% salary increase

ISLAMABAD: The government on Friday announced a 15 per cent increase in employees of the federal government.

Finance Minister Miftah Ismail while presenting budget 2022/2023 announced increase in salary of government employees by 15 per cent.

READ MORE: Share of domestic electricity consumption declines

The finance minister said that despite the fact that country is facing a severe fiscal crisis now we are aware of the hardships faced by government employees.

Price hike has affected the household spending badly, especially that of salaried class but in spite of the severe fiscal difficulties and lack of resources. Salaries of government employees are being increased by 15 per cent in order to improve their purchasing power.

READ MORE: Average inflation estimated up to 12% in FY22

The basic threshold of taxable salary is proposed to be enhanced to 12 lac from the current 6 lac rupees for salaried individuals. This would pass tens of billions of rupees benefit to salaried people.

This will generate a positive economic cycle whereby this money would get transferred to the businesses as the disposable income of salaried people increases therefore ultimately, the government will benefit through the thriving of the business, the creation of more jobs, and tax revenues in the future.

READ MORE: Federal government presents budget 2022-2023

June 11, 2022
Pakistan allocates Rs800 billion for FY23 PSDP

ISLAMABAD: Pakistan on Friday allocated Rs800 billion for the Public Sector Development Program (PSDP) for fiscal year 2022/2023.

The country presented the federal budget 2022/2023, which envisages PSDP worth 800 billion rupees for the next fiscal year.

It has been centered on improvement in sectors such as water resources, transport and communication, energy, higher education, health, science and technology, and balanced regional development.

READ MORE: Federal government presents budget 2022-2023

The emphasis of PSDP is also on revival of CPEC and related projects for inter-provincial and regional connectivity with equal importance to Special Economic Zones to promote trade, industrialization and create job opportunities.

The major thrust in the Information and Communication Technology sector including establishment and operations of Special Technology Zones.

Under the PSDP, the government has allocated 44.179 billion rupees including foreign aid of 1.3 billion rupees to the Higher Education Commission for implementation of 151 development projects.

READ MORE: Tax exemptions cost Rs1.76 trillion in FY22

The allocation indicates an increase of one hundred percent over the last year.

An allocation of over 197 billion rupees has been made for 117 power related projects.

These include hydro power generation projects such as Diamer-Bhasha, Mohmand, Nai Gaj and the fifth extension of Tarbela. Initiatives like developing water storages, automatic telemetry system, rainwater harvesting, decreasing water losses, ground water regulation and management would be undertaken in consultation with the stakeholders.

READ MORE: Share of domestic electricity consumption declines

Over nine billion rupees have been earmarked for Ten Billion Trees Tsunami Programme Phase-I to achieve the target of planting 500 million trees.

Similarly, over 563 million rupees and over 1.2 billion rupees have been allocated for installation of weather surveillance radars at Multan and Sukkur respectively.

The Federal PSDP has also proposed an amount of 1.5 billion rupees to complete the emergent nature of small flood schemes all over Pakistan.

READ MORE: Average inflation estimated up to 12% in FY22

An allocation of 227 billion rupees has been made for strengthening efficiency of transport and logistics for domestic commerce and regional connectivity.

The high impact infrastructure projects to be completed under Public Private Partnership mode include Sukkur-Hyderabad Motorway, Sialkot-Kharian Motorway, Kharian-Rawalpindi Motorway, and Karachi Circular Railway. Under the CPEC, D I Khan-Zhob section is under discussion with the Chinese side for financing and it is expected to be launched in the next financial year.

READ MORE: SBP jacks up policy rate by 6.75% to 13.75%

The concessional financing agreement for landmark ML-1 project is to be finalized in the second quarter of the next fiscal year and subsequently arrangements will be made for groundbreaking of the project.

A comprehensive National Action Plan for agriculture modernization has been prepared in terms of capacity building, agricultural product processing technology extension, fishery science and technology, aquaculture and aquatic products processing.

READ MORE: Tax to GDP ratio estimated at 10.8% in FY22: Economic Survey

June 11, 2022
Tax exemptions cost Rs1.76 trillion in FY22

ISLAMABAD: The cost of tax exemptions has been estimated at Rs1.76 trillion during the fiscal year 2021/2022 as compared with Rs1.31 trillion in the preceding fiscal year, according to Economic Survey of Pakistan released on Thursday.

The cost of exemptions and concessions under sales tax has increased to Rs1.014 trillion during fiscal year 2021/2022 as compared with Rs578 billion in the last fiscal year.

READ MORE: Share of domestic electricity consumption declines

The Federal Board of Revenue (FBR) granted duty exemptions and concessions to the tune of Rs343 billion in the outgoing fiscal year as compared with Rs288 billion in the preceding fiscal year.

The cost of exemptions and concessions under the head of income tax, however, declined to Rs399.66 billion in the fiscal year 2021-2022 as compared with Rs448 billion in the last fiscal year.

READ MORE: Average inflation estimated up to 12% in FY22

The survey said that there are a variety of factors responsible for the low tax to GDP ratio including a narrow tax base particularly agriculture contributing minimally to the tax collection, tax evasion, poor documentation, the informal economy, exemptions/concessions, smuggling, weak audit & enforcement, a lack of automation, and lengthy litigation.

READ MORE: SBP jacks up policy rate by 6.75% to 13.75%

As a result of insufficient tax revenues, the country has faced numerous challenges over the years in providing much-needed fiscal space for priority areas such as infrastructure, education, health, and targeted social assistance.

READ MORE: Tax to GDP ratio estimated at 10.8% in FY22: Economic Survey

June 10, 2022
Share of domestic electricity consumption declines

ISLAMABAD: The share of electricity consumption by domestic and commercial consumers in the total consumption has declined during first nine months of the current fiscal year, according to Economic Survey of Pakistan 2021/2022.

The share of electricity consumption by household users fell to 47 per cent during July – March 2021/2022 as against the share of 49.1 per cent in the same period of the last fiscal year.

READ MORE: Average inflation estimated up to 12% in FY22

Electricity consumption in the commercial sector has also witnessed a decline and stood at 7 percent in FY2022, down from 7.4 percent in FY2021.

However, the share of Industry in electricity consumption has increased to 28 percent during July-April FY2022 from 26.3 percent during July-April FY2021.

The use of electricity in agriculture sector has slightly increased to 9 percent from 8.9 percent. The share of electricity consumption in other sectors, including public lighting, general services and other government traction has decreased to 8 percent from 8.3 percent.

READ MORE: SBP jacks up policy rate by 6.75% to 13.75%

There is a slight shift in the percentage share of different sources in electricity generation. Thermal has still the largest share in electricity generation in the country, although its percentage contribution has declined from 62.5 percent during Jul-April FY2021 to 60.9 percent during Jul-April FY2022.

READ MORE: Tax to GDP ratio estimated at 10.8% in FY22: Economic Survey

Similarly, the percentage contribution of Hydel in electricity generation has also reduced from 27.8 percent in Jul-April FY2021 to 23.7 percent during Jul-April FY2022.

The percentage share of Nuclear has increased from 7.2 percent during Jul-April FY2021 to 12.35 percent during Jul-April FY2022. The contribution of renewable in the electricity generation has increased from 2.4 percent during Jul-April FY2021 to 3.02 percent in the first ten months of FY2022.

READ MORE: LSM posts 10.4% growth in July – March: Economic Survey

June 10, 2022
Average inflation estimated up to 12% in FY22

ISLAMABAD: The average inflation for the fiscal year 2021/2022 has been estimated up to 12 per cent as against the target of 8 per cent, according to Economic Survey of Pakistan released on Thursday.

The survey said that the rising input costs on the back of high utility prices and the lagged impact of exchange rate depreciation likely to maintain upward pressure on inflation in the following month of outgoing fiscal year.

There is significant uncertainty around the outlook for international commodity prices as well which had been exacerbated by the Russia- Ukraine conflict.

The impact will be more visible in non-food prices, while the food prices are likely to remain stable due to effective monitoring of prices and smooth supply of essential items by the federal and provincial governments.

READ MORE: SBP jacks up policy rate by 6.75% to 13.75%

“As a result of these developments, average inflation forecasts have been revised upwards and will remain 11.5-12.0 percent in FY2022,” the survey said.

For the outgoing fiscal year, the inflation target was set at 8.0 percent, but abnormal increase in global commodity prices especially crude oil and the edible oil has soared the domestic prices since Pakistan is net importer of these essential items.

It is the 6^th consecutive month when inflation rate has remained in double digit. Consumer Price Index (CPI) in April 2022 stood at 13.4 percent on a year-on-year (YoY) basis which was up from 12.7 percent in the previous month and 11.1 percent in April 2021. The pace of food inflation surged 15.6 percent in Urban and 17.7 percent in Rural during the month of April 2022. The CPI Inflation, recorded at 11.0 percent on average during July-April FY2022 as against 8.6 percent in same period last year.

READ MORE: Tax to GDP ratio estimated at 10.8% in FY22: Economic Survey

The pressures on headline inflation during the period can be attributed to adjustment in prices of electricity and gas, a significant increase in the non-perishable food prices, exchange rate depreciation along with rapid increase in global fuel and commodity prices.

The drivers of global price hike highlight that demand for goods was already strong but supply side limitations due to global logistics (transportation congestion) constraints added stress to already swelling prices. It is also recorded that the Wholesale Price Index (WPI) continued its upward trajectory, indicating persistent cost push inflationary pressure in the economy.

READ MORE: LSM posts 10.4% growth in July – March: Economic Survey

The government made best efforts to ensure smooth supply of essential domestic goods through vigilant monitoring of prices both at provincial and federal level. A Ramazan package of Rs 8.2 billion was provided through Utility Store Corporation (USC) for providing essential items to general public at affordable prices. Government has already approved import of three million metric tonnes of wheat to ease the supply in the country.

Further, continuous relief to the lower strata of the society from global inflationary pressure, the ECC granted approval to revise prices of wheat flour and sugar from Rs 950/20kg to Rs 800/20kg and Rs 85/kg to Rs 70/kg, respectively, and also directed that discount of Rs 190/kg on vegetable ghee will be continued. The government will continue to absorb the cost of subsidy for the benefit of the common man.

READ MORE: Agriculture surpasses FY22 growth target: Economic Survey

June 10, 2022
SBP jacks up policy rate by 6.75% to 13.75%

ISLAMABAD: The State Bank of Pakistan (SBP) has increased the key policy rate by 6.75 per cent during September 2021 to May 2022, according to Economic Survey of Pakistan 2021/2022 released on Thursday.

The survey stated that Pakistan’s economy has witnessed a V-shaped recovery in 2020-2021 after witnessing a contraction of 0.9 percent in FY2020.

After the COVID outbreak, the policy rate was reduced by 6.25 per cent within short span of less than three months, during March-June 2020. This was the largest policy rate cut in emerging market economies.

READ MORE: Tax to GDP ratio estimated at 10.8% in FY22: Economic Survey

During FY2021, the SBP maintained an accommodative monetary policy stance, by keeping the policy rate unchanged at 7.0 percent throughout FY2021.

Besides, SBP provided liquidity and regulatory support to businesses and households during the challenging times. The economic policy was implemented with a prudent mix which supported the economic recovery without putting any pressure on macroeconomic imbalances.

With heightened uncertainty due to COVID-19, the Monetary Policy Committee for the first time considered it appropriate to provide some forward guidance on monetary policy in its January 2021 meeting, to facilitate policy predictability and decision making by economic agents.

In the absence of unforeseen developments, the Monetary Policy Committee (MPC) expected monetary policy settings to remain unchanged in the near term.

READ MORE: LSM posts 10.4% growth in July – March: Economic Survey

Moreover, in the subsequent monetary policy decisions during FY2021, the MPC has maintained the policy rate of 7.0 percent to nurture the economic recovery.

At the end of first quarter FY2022, policy rate has increased by 25 basis points (bps) to 7.25 percent. The decision was primarily based on observation of excess aggregate demand and more than expected economic recovery as reflected by rising high import bill and increasing current account deficit.

The objective of monetary policy was shifted to ensuring the appropriate policy mix to protect the longevity of growth, keep inflation expectations anchored, and control the current account deficit.

In subsequent Monetary Policy decisions announced in November and December, 2021, policy rate was increased by 150 bps and 100 bps to 8.75 percent and 9.75 percent, respectively. The decision was made due to heightened risks associated with inflation and balances of payments, which stemmed from both global and domestic factors.

READ MORE: Agriculture surpasses FY22 growth target: Economic Survey

In Pakistan, high import prices have contributed to higher-than-expected inflation outturns. At the same time, there were also emerging signs of demand-side pressures on inflation from domestic administered prices.

In December, 2021 Monetary policy decision, MPC explained that the goal of mildly positive real interest rates was now close to being achieved. Looking ahead, the MPC expected monetary policy settings to remain broadly unchanged in the near-term.

Resultantly, policy rate has kept unchanged at 9.75 percent in two successive decisions held on January and March, 2022.

However, policy rate was increased by 250 bps to 12.25 percent from 9.75 percent in an unscheduled meeting on 07th April 2022, to address significant uncertainty amidst rising global commodity prices and domestic political situation. The inflation outlook had deteriorated and risks to external stability had increased for FY2022. Externally, futures market suggests that global commodity prices, including oil, are likely to remain elevated for longer and the Federal Reserve is likely to increase interest rates more quickly than previously anticipated, likely leading to a sharper tightening of global financial conditions.

READ MORE: Per capita income in Pakistan rises to $1,798 in 2021-22

Domestically, some macroeconomic indicators have deteriorated, as have SBP reserves as a result of debt repayment and political uncertainty.

In monetary policy decision held on 23rd May, 2022 the MPC decided to raise the policy rate by 150 basis points to 13.75 percent. The decision was based on outcome of provisional growth estimates for FY2022 more than target, shows excess aggregate demand, elevated external sector pressure and the higher inflation outlook due to domestic and international factors.

In addition to policy rate increase, the interest rates on EFS and LTFF loans are also being raised. The MPC has informed that in future, these rates will be linked to the policy rate and will adjust automatically, while continuing to remain below the policy rate in order to incentivize exports.

June 10, 2022
Tax to GDP ratio estimated at 10.8% in FY22

ISLAMABAD: Pakistan’s tax to GDP ratio has been estimated at 10.8 per cent for the fiscal year 2021/2022 as against the ratio of 8.5 per cent in the preceding fiscal year, according to Economic Survey of Pakistan 2021/2022 released on Thursday.

The tax to GDP ratio has been estimated on the basis of tax collection by the Federal Board of Revenue (FBR). The FBR tax to GDP ratio since fiscal year 2015/2016 is calculated on the basis of the revised GDP at the new base of 2015/2016, according to the survey.

READ MORE: LSM posts 10.4% growth in July – March: Economic Survey

The tax-to-GDP ratio is the real index for measuring tax compliance, capacity, and efficiency in the tax system. A higher tax to GDP ratio allows the government to rely more on domestic resources rather than external sources of revenue, while also ensuring the availability of sufficient funds to meet a country’s development and social expenditures.

Unfortunately, the tax to GDP ratio in Pakistan remains low over the years. There are a variety of factors responsible for the low tax to GDP ratio including a narrow tax base particularly agriculture contributing minimally to the tax collection, tax evasion, poor documentation, the informal economy, exemptions/concessions, smuggling, weak audit & enforcement, a lack of automation, and lengthy litigation.

READ MORE: Agriculture surpasses FY22 growth target: Economic Survey

As a result of insufficient tax revenues, the country has faced numerous challenges over the years in providing much-needed fiscal space for priority areas such as infrastructure, education, health, and targeted social assistance.

Overall tax revenues (federal & provincial) increased to 9.4 percent of GDP in FY2021 against 9.3 percent of GDP recorded in FY2020. In total, FBR which collects a major part of tax revenues was able to increase the tax to GDP ratio to 8.5 percent in FY2021 against 8.4 percent of GDP in FY2020.

READ MORE: Per capita income in Pakistan rises to $1,798 in 2021-22

Total tax collection has been severely impacted over the last two years: first in FY2019 due to a slowdown in economic activity because of stabilization measures, a low tax rate on major petroleum products, import compression, suspension of withholding tax collection on mobile top-ups, and a reduced rate on salary income.

Second, during FY2020, the COVID-19 crisis hampered tax collection. However, FBR’s measures to improve the tax collection helped it to achieve a growth of 19 percent in FY2021 against a 4.4 percent rise in the preceding year.

READ MORE: Pakistan achieves 5.97% GDP growth in 2021/2022: Economic Survey

It is worth mentioning that FBR tax collection crossed the Rs 4 trillion mark for the first time in history. Nonetheless, during the last six years, the tax to GDP ratio remained lower within a range of 8.4 percent and 9.8 percent.

June 10, 2022
LSM posts 10.4% growth in July – March: Economic Survey

ISLAMABAD: Large Scale Manufacturing (LSM) has registered a significant 10.4 per cent growth during first nine months (July – March) of the current fiscal year, according to Economic Survey of Pakistan 2021/2022 released on Thursday.

According to the survey, the performance of LSM stood tremendous with 10.4 percent growth during July-March 2021/2022 as compared to growth of 4.2 percent same period last year.

READ MORE: Agriculture surpasses FY22 growth target: Economic Survey

The prudent measures and continuous support along with rising global demand, easy access to credit, and partially subsidized energy supplies bode well in boosting the business sentiments and achieving higher growth of LSM.

On a year-on-year (y-o-y) basis, LSM grew by 26.6 percent in March FY2022 against 22.5 percent growth in the same month last year. However, on a month-on-month (m-o-m) basis LSM marked the growth of 8.2 percent in March 2022 against 3.7 percent in February 2022.

READ MORE: Per capita income in Pakistan rises to $1,798 in 2021-22

Out of 22 subsectors, 17 posted growth during July-March FY2022. The performance was broad-based on the back of strong growth of high weighted sectors such as Textile, Food, Wearing Apparel, Chemicals, Automobile, Tobacco, Iron & Steel Products along with Furniture, Wood Products, and Footballs.

READ MORE: Pakistan achieves 5.97% GDP growth in 2021/2022: Economic Survey

The Mining and Quarrying sector remained negative at 4.47 percent during July-March FY2022 as against the growth of 1.21 percent last year. This sector is lagging behind despite huge potential, due to interconnected and cross-cutting issues like poor regulatory framework, insufficient infrastructure at mines sites, outdated technology installed, semi-skilled labor, low financial support, and lack of marketing. Production of major minerals such as Coal, Natural Gas, Chromite, Crude Oil, and Barytes witnessed a growth of 8.34, 3.45, 25.7, 4.48, and 162.5 percent, respectively.

READ MORE: Pakistan may increase normal sales tax rate to 18%

However, some witnessed negative growth during the period under review such as Magnesite 52.3 percent, Gypsum 36.9 percent, Lime stone 33.3 percent, Ocher 25.5, Rock Salt 24.2 percent, and Marble 22.9 percent.

June 10, 2022