Pkrevenue.com

Category: Finance

Explore finance-related stories with Pakistan Revenue, your source for the latest updates on Pakistan’s economy, financial trends, and market insights. Stay informed with real-time economic developments.

  • SBP jacks up policy rate by 6.75% to 13.75%

    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.

  • Tax to GDP ratio estimated at 10.8% in FY22

    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.

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

    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.

  • Agriculture surpasses FY22 growth target: Economic Survey

    Agriculture surpasses FY22 growth target: Economic Survey

    ISLAMABAD: The agriculture sector has surpassed the growth target of 3.5 per cent for fiscal year 2021-2022 and grew by 4.40 per cent during the fiscal year under review, according to the Economic Survey of Pakistan 2021/2022 released on Thursday.

    It said during FY22 (2021/2022), the agriculture sector recorded a remarkable growth of 4.40 percent and surpassed the target of 3.5 percent and last year’s growth of 3.48 percent.

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

    This growth is mainly driven by high yields, attractive output prices and supportive government policies, better availability of certified seeds, pesticides, and agriculture credit.

    The crops sector outperformed and posted a growth of 6.58 percent during FY22 against 5.96 percent last year. At the sub-sector level, important crops, other crops, and cotton ginning depicted a significant growth of 7.24 percent, 5.44 percent, and 9.19 percent, respectively, against last year’s growth of 5.83 percent, 8.27 percent, and -13.08 percent.

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

    The growth in production of important crops namely cotton, rice, sugarcane, and maize are estimated at 17.9 percent, 10.7 percent, 9.4 percent, and 19.0 percent, respectively.

    The cotton crop increased from 7.1 million bales reported last year to 8.3 million bales during 2021-2022; rice production increased from 8.4 million tonnes to 9.3 million tonnes; sugarcane production increased from 81.0 million tonnes to 88.7 million tonnes; maize production increased from 8.9 million tonnes to 10.6 million tonnes respectively, while wheat production decreased from 27.5 million tonnes to 26.4 million tonnes.

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

    Other crops having a share of 13.86 percent in agriculture value addition and 3.14 percent in GDP, grew by 5.44 percent on the back of an increase in the production of pulses (29.82 percent), oilseeds (24.75 percent), vegetables (11.52 percent), fruits (1.53 percent) and fodders (0.36 percent).

    Livestock having a share of 61.89 percent in agriculture and 14.04 percent in GDP, recorded a growth of 3.26 percent in 2021-22 compared to 2.38 percent during the same period last year.

    The fishing sector having a share of 1.39 percent in agriculture value addition and 0.32 percent in GDP grew at 0.35 percent compared to a growth of 0.73 percent in the same period last year.

    READ MORE: PM Shehbaz assures favorable measures on CNIC requirement

    The forestry sector having a share of 2.14 percent in agriculture value addition and 0.49 percent in GDP posted a positive growth of 6.13 percent against the negative growth of 0.45 percent last year.

    Water availability during Kharif 2021 was recorded at 65.1 million-acre feet (MAF) compared to 65.1 MAF of Kharif 2020. Rabi season 2021-22 stood at 27.4 MAF, showing a decrease of 12 percent over Rabi 2020-2021.

    The domestic production of fertilizers during FY2022 (July-March) increased by 1.9 percent over the same period of last year. This increase in domestic production of fertilizer is mainly due to the running of two LNG-based plants, FatimaFert and Agritech Limited, from September 2021 to March 2022. Although the import of fertilizer decreased by 6.2 percent, however, the total availability of fertilizer slightly increased by 0.5 percent.

    There was a decrease in the total offtake of fertilizer nutrients by 3.6 percent.

    During July-March FY2022, total tractor production reached 41,871 compared to 36,900 produced last year, a 13.5 percent higher than the same period last year.

    During FY2022 (July-March), banks disbursed Rs 958.3 billion which is 56.4 percent of the overall annual target and 0.5 percent higher than the disbursement of Rs 953.7 billion made during the same period last year. Further, the outstanding portfolio of agricultural loans has increased by Rs 30.9 billion i.e., from Rs 601.8 billion to Rs 632.7 billion at end of March 2022 as compared to the same period last year.

    In terms of outreach, the number of outstanding borrowers reached 3.2 million in March 2022.

    During FY2022 (July-March), total fish production was recorded at 696.0 thousand MT (marine: 468 thousand MT and inland: 228 thousand MT) witnessing an increase of 0.8 percent over the same period of last year’s fish production of 690.6 thousand MT (marine: 465.2 thousand MT and inland: 225.4 thousand MT).

  • Economic growth to be slow down next year: Economic Survey

    Economic growth to be slow down next year: Economic Survey

    ISLAMABAD: After achieving GDP growth at 5.97 per cent in the fiscal year 2021/2022, the economic growth to be slow down next year, according to the Economic Survey of Pakistan released on Thursday.

    The survey stated that Pakistan’s economy faces several severe challenges. Inflation is running too high, the prospects for future growth in potential output are challenging.

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

    Fiscal deficit is at a level where its financing is becoming challenging. Further, high trade deficit is leading to external imbalances putting extra pressure on foreign reserves and on the exchange rate. “Economic growth seems to be slow down next year,” it added.

    Moreover, high uncertainties are restricting market confidence. In the short run, Pakistan is confronted with the challenge to finance its external finance requirements stemming from current account deficits and foreign debt servicing.

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

    Successful conclusion of the seventh review of Pakistan’s reform program which is supported by an IMF Extended Fund Facility arrangement is on the right direction.

    The government is very much committed to ensure the stability and confidence in the economy.

    Stable fiscal policy with a higher, growth promoting path for Public Sector Development Program (PSDP), based on physical and human capital development will be obligatory.

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

    Likewise, subsidies targeted to stimulate development of innovative industries and services will be essential. On the revenue side, growth-oriented revenue policies will be helpful. There is intense need of creating an environment conducive for investments.

    Further, the investment must be capable of considerably augmenting the share of GFCF in GDP as well as increasing the efficiency to create additional welfare. Investors and consumers need to be convinced of a long term sustainable and inclusive growth project that inspires confidence in Pakistan’s economic future and that induces them to take initiatives in their own and in the country’s interest. Thus, well-functioning competitive markets is required.

    READ MORE: PM Shehbaz assures favorable measures on CNIC requirement

    There is also need to continue policies which brought improvement in related sectors. For example, Prime Minister’s Agriculture Package and related agricultural policies remained more effective for better agriculture performance. Likewise, policies related to energy mix and efficient energy supplies.

    Furthermore, there is also need of stable legislative and political culture.

    READ MORE: New tax measures likely in budget 2022-2023

    As a result of these, it is expected that potential output growth will be upgraded, resulting in higher employment and real income growth. It will also create additional capacity for exports and import substitution and a stable exchange rate environment.

    Thus, demand management fiscal and monetary policies should on average be neutral and play their role of cyclical stabilizers when temporary shocks create deviations from the long-term growth path.

  • SBP’s forex reserves slip 2½-year low to $9.226 billion

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

    KARACHI: The official foreign exchange reserves of the State Bank of Pakistan (SBP) have slipped 2½-year low to $9.226 billion by week ended June 03, 2022, according to official statistics released on Thursday.

    On weekly basis the official reserves of the central bank fell by $497 million to $9.226 billion by week ended June 03, 2022 as compared with $9.723 billion a week ago i.e. May 27, 2022.

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

    The State Bank said that its foreign exchange reserves were declined due to external debt repayment.

    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. Since touching the peak the central bank’s foreign exchange witnessed a continuous decline. The official reserves of the SBP fell around $10.92 billion by week ended June 03, 2022 from touching the peak on August 27, 2021.

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

    Overall the foreign exchange reserves of the country declined by $595 million to $15.176 billion by week ended June 03, 2022 as compared with $15.771 billion a week ago.

    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 $12.052 billion.

    The foreign exchange held by commercial banks also fell by $98 million to $5.95 billion by week ended June 03, 2022 as compared with $6.048 billion a week ago.

    READ MORE: Raw materials excluded from import banned items list

  • Per capita income in Pakistan rises to $1,798 in 2021-22

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

    ISLAMABAD: The per capita income in Pakistan has increased to $1,798 during fiscal year 2021/2022, according to Economic Survey of Pakistan.

    The Economic Survey of Pakistan 2021/2022 launched on Thursday. According to the survey the per capita income of the country improved to $1,798 during the fiscal year 2021/2022 as compared with $1,676 in the last fiscal year.

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

    Regarding per capita income in terms of dollar, there was a rebound seen in 2020-2021 which continued in 2021-2022, the survey said.

    “In the outgoing fiscal year, per capita income was recorded at $1,798 which reflects an improvement in prosperity due to the fact that economic growth per person improved,” the survey added.

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

    According to the survey though economy recovered from the pandemic (a 0.94 percent drop in FY2020) and maintained V-Shaped recovery by posting real GDP growth of 5.97 percent in the fiscal year 2022. This high growth, however, is unsustainable and has resulted in financial and macroeconomic imbalances.”

    READ MORE: PM Shehbaz assures favorable measures on CNIC requirement

    The economic survey highlighted that political instability in the country also led to a huge increase in economic uncertainty. Uncertainty at individual, firm, and government levels is negatively affecting the economy. Political stability can reduce uncertainty by making clear policy statements to build the trust of domestic as well as foreign investors and the business community.

    READ MORE: New tax measures likely in budget 2022-2023

    The survey highlighted that the higher high growth, however, is also accompanied by external and internal imbalances, as has been the case historically with Pakistan’s economy. However, external circumstances also played a critical role this time.

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

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

    ISLAMABAD: Pakistan has achieved the GDP growth at 5.97 per cent in the fiscal year 2021/2022. However the economy also started to show signs of excess demand and overheating through an increase in the import volume of capital and consumer goods, energy, and non-energy imports.

    This was revealed by Economic Survey of Pakistan 2021/2022 launched by Finance Minister Miftah Ismail on Thursday.

    The survey pointed out that though economy recovered from the pandemic (a 0.94 percent drop in FY2020) and maintained V-Shaped recovery by posting real GDP growth of 5.97 percent in the fiscal year 2022. This high growth, however, is unsustainable and has resulted in financial and macroeconomic imbalances.”

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

    The economic survey highlighted that political instability in the country also led to a huge increase in economic uncertainty. Uncertainty at individual, firm, and government levels is negatively affecting the economy. Political stability can reduce uncertainty by making clear policy statements to build the trust of domestic as well as foreign investors and the business community.

    The survey highlighted that the higher high growth, however, is also accompanied by external and internal imbalances, as has been the case historically with Pakistan’s economy. However, external circumstances also played a critical role this time.

    These circumstances have placed almost all economies of the world in shambles. A highly transmissible Omicron variety, changes in Afghanistan’s government after the withdrawal of US troops sparked and the Russian-Ukraine conflict started in February 2022, all of these have upended the global economic picture. Financial and commodity markets have felt shockwaves.

    READ MORE: PM Shehbaz assures favorable measures on CNIC requirement

    Thus, energy and food prices have surged rapidly and threaten to remain further elevated. The exceedingly uncertain outcome of the crisis is another challenge for developing economies, particularly for Pakistan.

    The survey pointed out that Pakistan’s economy has shown a strong recovery after being depressed due to the pandemic which resulted in lockdown. For FY2022, real GDP (GVA at basic prices 2015-16) posted a growth of 5.97 percent on account of 4.40 percent growth in Agriculture, 7.19 percent growth in the Industrial sector, and 6.19 percent growth in the Services sector. This growth is slightly above the growth of 5.74 percent recorded for 2020-2021.

    The coordinated monetary-fiscal policy approach after the COVID-19 outbreak has succeeded in reviving the real economic activity. Specifically, the fiscal-monetary stimulus packages have a cascading effect on growth through a revival in private investment.

    In addition, the accommodative monetary policy stance in FY2021, focused on the revival of the construction industry and mandatory housing finance targets by the SBP, together with the rebound in external demand has set the stage for stronger growth momentum in the fiscal year 2021/2022.

    READ MORE: New tax measures likely in budget 2022-2023

    Further, growth momentum was observed on account of broad-based expansion in large-scale manufacturing (LSM) and improved crop production. However, the economy also started to show signs of excess demand and overheating through an increase in the import volume of capital and consumer goods, energy, and non-energy imports.

    On the external front, the exports grew remarkable on account of policy supports provided-including regionally competitive energy tariff rates, Export Facilitation Scheme 2021, enhancement in coverage and loan limits under LTFF, Changes in FX regulations to facilitate exports, the launch of an e-Tijarat portal and tariff rationalized in various sectors in line with objectives of National Tariff Policy 2019-2024. In addition to this, STPF 2020-25 has been prepared to enhance the export competitiveness of Pakistan through a framework of interventions having an impact across the value chains.

    Furthermore, textile policy 2020-25 has also been approved to fully utilize the potential of home-grown cotton augmented by man-made fibers and filaments to boost value-added exports. Moreover, at the international level, World Trade Organization (WTO) has undertaken the Trade Policy Review (TPR) for Pakistan to achieve transparency and a better understanding of trade policies and practices.

    READ MORE: Pakistan Budget 2022-2023 – estimates

    However, a surge in global commodity prices is exerting pressure on imports by significantly pushing up import payments. Resultantly, the sizeable trade deficit of US$ 32.9 billion during July-April FY2022 was partially financed by significant workers’ remittances.

    Thus, in the period under discussion, the current account posted a deficit of US$ 13.8 billion compared to a deficit of US$ 0.5 billion during the same period last year. The widening of the current account deficit together with a build-up in inflationary pressures in the backdrop of the geopolitical situation (especially the Russia-Ukraine conflict) has created significant challenges for sustainable economic growth.

    In addition, the recent emergence of domestic conditions (including political instability) is eroding business confidence. Thus, all in all, inflationary and external sector pressures have created macroeconomic imbalances in the economy.

    To counter inflationary pressure and for sustainable economic recovery, SBP moved to monetary policy normalization in September 2021. Policy Rate increased by cumulative 675 basis points (6.75 per cent) between September-April, FY2022.

    The CPI inflation for the period July-May FY2022 was recorded at 11.3 percent as against 8.8 percent during the same period last year. The pressures on headline inflation can fairly be attributed to adjustments in prices of electricity and gas, a significant increase in the non-perishable food prices, exchange rate depreciation along with a rapid increase in global fuel and commodity prices.

    Shocks to the economy caused significant damage to Pakistan’s public finances. In response, the Government formulated and implemented various policy initiatives which improved fiscal outcomes, especially on the revenue side. The Federal Board of Revenue (FBR) has initiated various policy and administrative measures to facilitate the taxpayers to mobilize domestic resources and generate sufficient revenue without hurting growth momentum.

    READ MORE: Compliance cost much higher for corporatization: PSX

    FBR tax collection witnessed a substantial growth of 28.5 percent during July-April FY2022. However, higher grants and huge subsidies kept the expenditure side under intense pressure. The fiscal deficit increased to 3.8 percent of GDP in July-March FY2022 against 3.0 percent of GDP during the same period last year. Similarly, the primary balance posted a deficit of Rs 447.2 billion.

    In the medium term, comprehensive measures are needed to strengthen and reliability of overall economic performance to reinvigorate the economy, spur growth, maintain price stability, provide jobs to the youth and rebuild the key infrastructure of the country. This will also require fiscal adjustments, and reforms in almost every sector of the economy to lay the foundation for higher, inclusive, and sustainable economic growth.

    For current fiscal year, GDP at current market prices stands at Rs 66,950 billion showed a growth of 20.0 percent over last year (Rs 55,796 billion). In the dollar term, it remained at US$ 383 billion. Gross National Income (GNI) is also used for measuring and tracking a nation’s wealth which is calculated by adding Net Primary Income (NPI) to GDP (MP).

  • No increase in petroleum prices: Miftah

    No increase in petroleum prices: Miftah

    ISLAMABAD: Finance Minister Miftah Ismail on Tuesday strongly rejected the reports attributing him regarding increase in petroleum prices in Pakistan.

    “In the pre-budget seminar I never even spoke about petroleum prices. Channels running these tickers are doing a disservice to their viewers. There will be no increase in prices today (June 7, 2022) and there is no summary or plan to raise prices,” Ismail said in a Tweet.

    Earlier, at the pre-budget seminar, the finance minister said that the government was determined to present a progressive budget, with special focus on fiscal consolidation to bring down the budget deficit below 5 percent of the Gross Domestic Product (GDP).

    Addressing a day-long Pre-Budget Business Conference, the minister said an effective strategy had been evolved to achieve the GDP growth up to 6 percent and control inflation with strategic measures.

    The conference was convened to provide a platform to agriculturists, information technology (IT) experts and businessmen to share and exchange their proposals with the government on IT, agriculture, business, textile and exports.

    READ MORE: Petroleum prices in Pakistan from June 01, 2022

    Miftah said the incumbent government had to take difficult decisions to put the economy on track, and it could take more drastic measures if required to improve it.

    He said the Pakistan Muslim League-Nawaz (PML-N) came into power in a difficult situation, and it would leave it in a much better condition on the completion of its government tenure.

    “You are all with us, we will leave it in a better position,” he said while addressing the audience.

    The minister said the current government had re-engaged Saudia Arabia, China, the United Arab Emirates and other friendly countries, and it would hopefully help improve the situation in the country.

    READ MORE: Compliance cost much higher for corporatization: PSX

    He said Prime Minister Shehbaz Sharif had realized the situation being faced by the downtrodden segments of the society and accordingly directed the quarters concerned to make plans for providing maximum relief to them before hiking petrol prices.

    He said the government would provide stipend to around 14 million people, approximately one third of the country’s population.

    Miftah expressed pleasure over the presence of stakeholders in the consultative gathering to take collective decisions at the critical juncture and lead the country towards a better future.

    He assured the participants that the government would take all sectors along.

    READ MORE: FBR suggested reduction in tax rates for equity funds

    The minister said the government had inherited the economy in a bad situation, as the country witnessed the third highest inflation rate after Argentina and Turkey.

    He said during the four years of Pakistan Tehreek-e-Insaf government, some 20 million people went below the poverty line and 0.6 million lost their jobs.

    Every year, he said, around two million people joined the labour market and the country needed around 6 percent economic growth rate to absorb them. However, negative growth during the PTI regime led to unemployment and increase in poverty.

    When the incumbent government took over, he said, around Rs 5,600 billion deficit was projected, and it was making concerted efforts to bring it down to Rs 5,200 billion.

    The minister said there was average deficit of Rs 1,650 billion per annum during the PML-N’s last tenure, and it rose to Rs 5,600 billion in just three and a half years of the PTI government. The deficit had risen from 6.5 percent to 9.1 percent of the GDP in the PTI regime, he added.

    He said average debt taken by the PTI government stood at Rs 5,177 billion whereas the PML-N government had taken Rs 2,132 billion, which was utilized for building power plants and other infrastructure.

    READ MORE: New petroleum prices in Pakistan from June 03, 2022

    The total debt taken by 19 prime ministers during the last 70 years was Rs 24,952 billion, whereas the PTI government took around Rs 20,000 billion, which was around 80 percent of the total debt.

    The minister said around Rs 1,072 billion power subsidy was given during the current year whereas the circular debt went up to Rs 500 billion, taking the total power sector losses to Rs 1,600 billion.

    He said the petroleum sector was also given Rs 81 billion subsidy while it had a circular debt of around 400 billion. Likewise, the Sui Northern Gas Pipelines Ltd was facing losses of Rs 200 billion and the Pakistan State Oil of Rs 500 billion.

    He said the country needed about $41 billion for debt payment of $ 21 billion over the next 12 months and building foreign exchange reserves up to $18 billion.

    He said the government re-engaged the International Monetary Fund (IMF) and expressed the hope that the agreement would be signed soon.

    Miftah said the government had to enhance the petrol prices under compulsion, as otherwise, it would have to incur a loss of Rs 120 billion per month – three times more than its expenditures.

    He lamented that the country had become an importer of sugar and wheat, contrary to the fact that two commodities were exported during the last PML-N government.

  • Prices of essential items rise by 20% on first POL rate jump

    Prices of essential items rise by 20% on first POL rate jump

    ISLAMABAD: The prices of essential items recorded an increase of 20 per cent owing to first jump in petroleum prices announced a week ago, official documents revealed on Friday.

    The inflation based on Sensitive Price Indicator (SPI) has increased by 20.04 per cent on year on year basis by week ended June 02, 2022, according to data released by Pakistan Bureau of Statistics (PBS).

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

    On week on week (WoW) basis the SPI recorded a two percent for the week ended June 02, 2022 over the previous week ended May 06, 2022.

    The SPI determines the price fluctuation in basic kitchen items on weekly basis. The Sensitive Price Indicator comprises 51 essential items collected from 50 markets in 17 cities.

    The latest surge in prices of essential items is the result of increase in prices of petroleum products that were announced on May 26, 2022 and effective from May 27, 2022.

    READ MORE: Pakistan’s inflation sharply up by 13.4% in April 2022

    The federal government on May 26, 2022 announced a sharp increase of Rs30 per cent liter each on all petroleum products.

    The price hike in essential items likely to rise alarmingly and may reflect in the SPI of next week ended June 9, 2022 as the government again increased the prices of petroleum products on June 02, 2022.

    According to the PBS, the SPI for the current week ended on June 02, 2022 recorded an increase of 2 per cent.

    READ MORE: Pakistan’s headline inflation increases by 12.7% in March

    Increase observed in the prices of food items Potatoes (9.08 per cent), Eggs (6.38 per cent), Vegetable Ghee 1 kg (4.59 per cent), Bread (2.72 per cent), Mustard Oil (2.65 per cent), Pulse Masoor (2.33 per cent), Cooking Oil 5 litre (2.18 per cent), Pulse Gram (1.99 per cent), Sugar (1.93 per cent), Cooked Beef & Pulse Mash (1.69 per cent) each, Vegetable Ghee 2.5 kg (1.51 per cent) and Bananas (1.35 per cent), non-food items Hi-Speed Diesel (20.69 per cent), Petrol Super(19.91 per cent) and Toilet Soap (1.40 per cent) with joint impact of (2.09 per cent) into the overall SPI for combined group of (2.00 per cent).

    On the other hand, decrease observed in the prices of Chicken (4.68 per cent ), Garlic (2.75 per cent), Wheat Flour (1.91 per cent), Tomatoes (1.26 per cent) and LPG (0.74 per cent).

    READ MORE: Food inflation rural increases by 14.6% in February 2022

    During the week, out of 51 items, prices of 28 (54.90 per cent) items increased, 05 (9.81 per cent) items decreased and 18 (35.29 per cent) items remained stable.

    The year on year trend depicts an increase of 20.04 per cent, Onions (177.62 per cent), Tomatoes (152.57 per cent), Mustard Oil (70.50 per cent), Vegetable Ghee 1 Kg (68.02 per cent), Garlic (67.44 per cent), Pulse Masoor (66.92 per cent), Petrol (64.78 per cent), Cooking Oil 5 litre (64.72 per cent), Vegetable Ghee 2.5 Kg (62.43 per cent), LPG (60.14 per cent), Diesel (56.45 per cent) and Washing Soap (42.92 per cent), while major decrease observed in the prices of Chillies Powdered (43.42 per cent), Pulse Moong (21.62 per cent), Electricity charges for Q1 (11.71 per cent), Sugar (11.16 per cent), Bananas (9.95 per cent), Potatoes (6.89 per cent) and Gur (1.46 per cent).