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  • Finance Division rebuts economic emergency report

    Finance Division rebuts economic emergency report

    ISLAMABAD: Finance Division on Tuesday strongly rebutted the reports regarding proposals under consideration for imposing economic emergency.

    According to a statement issued by the finance division, a false message on supposed economic emergency proposals has been circulating on the social media in recent days.

    READ MORE: Pakistan purchases 450,000 metric tons wheat from Russia

    The finance division not only strongly rebuts the assertions made in the said message and but also categorically denies it and that there is no planning to impose economic emergency.

    The message is unfortunately aimed at creating uncertainty about the economic situation in the country and can only spread by those who do not want to see Pakistan prosper.

    Creation and spread of such false messages is against national interest in these times of economic hardship. A mere reading of the nine points mentioned in the message indicates how far-fetched those suggestions are.

    READ MORE: Saudi Arabia extends term of $3 billion deposit for Pakistan

    It is also quite inappropriate to equate Pakistan with Sri Lanka, given inherent strength and diversity in Pakistan’s economy.

    The present difficult economic situation is mainly the result of exogenous factors like commodity super-cycle, Russia-Ukraine war, global recession, trade headwinds, Fed’s increase in policy rates and devastation wreaked by unprecedented floods.

    The government has been making utmost efforts to minimize the impact of such external factors, even when faced with the economic consequences of unprecedented floods and having to meet IMF conditionalities.

    READ MORE: Pakistan exports plunge 18.34pc in November 2021

    The authorities are committed to completing the IMF program while meeting all external debt repayments on time. In this challenging economic situation, the government has put in place a number of austerity measures with the approval of the Federal Cabinet.

    Such measures are in public knowledge and are aimed at eliminating non-essential expenditures. Similarly, the Government has been deliberating energy conservation mainly aimed at reducing the import bill.

    Such deliberations will continue in the Cabinet and all decisions will be taken in consultation with all stakeholders and in the best national interest. With the efforts of the current government, the IMF program has come back on track and negotiations leading to 9th Review are now at an advanced stage. Government’s recent efforts have resulted, amongst others, in lower current account deficits in recent months and achievement of FBR revenue targets.

    READ MORE: SBP foreign exchange reserves fall to $7.5 billion

    Easing up of pressure on external account is also foreseen in the near future. While there remains the need to make structural adjustments in the mid-term, the economic situation of the country is now moving towards stability.

    Finance Division urges the people of Pakistan to contribute towards economic betterment and stability and not to pay heed to malicious rumors mongering which is against the national interest of Pakistan.

  • Over 400 vegetable containers stuck up at ports due to dollar shortage

    Over 400 vegetable containers stuck up at ports due to dollar shortage

    KARACHI: Over 400 containers of vegetables have been stuck up at ports as commercial banks are not issuing documents due to shortage of dollars.

    All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association in a letter to the commerce ministry sent on Tuesday, stated that the containers of Onion are still held up at the various terminals of Karachi sea port since the commercial banks are not releasing the documents due to non-availability of foreign exchange as per statement of the banks.

    READ MORE: FPCCI demands release of soybean, canola cargoes

    The in-ordinance delay in timely clearance would lead to multiplication of cost of the containers (e.g. terminal charges and shipping charges) with each passing day. The high cost of onion containers would have a serious negative impact on common men making onion out of their reach due to high price and hence the government sincere initiative to provide relief to the common men would be jeopardized.

    READ MORE: KATI urges removal of regulatory duty on yarn

    The association said that as of today the wholesale rate of onion is Rs175 per kilogram and retail price is Rs250-270 per kg and with further delay in clearance, these rates are anticipated to further shoot up depriving the common men to buy the daily used vegetable onion.

    READ MORE: Pakistan slaps 5pc regulatory duty on yarn import

    The status of containers of various vegetables held up the various terminals of Karachi sea ports as of today is as follow:

    Onion: 250 containers approximately worth $2.1 million

    Ginger: 63 containers approximately worth $0.82 million

    Garlic: 104 containers approximately worth $2.53 million

    The association demanded the government to take prompt action in the best interest of the common people to provide relief to them and make sincere efforts of the government successful.

    READ MORE: Industries threaten mass protest against gas supply shutdown

  • Dollar hits PKR 224.11 amid foreign payment demands

    Dollar hits PKR 224.11 amid foreign payment demands

    KARACHI: US dollar has made a gain of 20 paisas against Pakistani Rupee (PKR) to reach PKR 224.11 on Tuesday in interbank foreign exchange market.

    The exchange rate were closed at PKR 223.91 to the dollar a day earlier in the interbank foreign exchange market.

    READ MORE: Rupee declines 22 paisas to dollar amid payment demand

    Currency experts said that falling foreign exchange reserves and rising scheduled repayment against foreign debt increased the volatility in the foreign exchange market.

    They said that the market had also witnessed higher dollar demand for import and corporate payments. The experts said that corporate buyers were also seen active for purchasing dollar to make payment of dividends in the month of December.

    Last week the rupee showed resilience against the dollar due to rollover approval of $3 billion by the Saudi government.

    READ MORE: PKR ends stable to dollar on $3 billion Saudi rollover

    The Saudi Fund for Development (SFD) extended the term for the deposit provided by the Kingdom of Saudi Arabia in the amount of $3 billion to the State Bank of Pakistan.

    However, recent payment of over a billion dollars against Sukuk by the government to international commercial investors also put pressure on the exchange rate.

    Currency experts said that tightening of monetary policy and contraction in import payment demand helped the rupee to make recovery.

    They said that the SBP should be more vigilant because latest efforts were not enough as Pakistan’s external sector was facing huge challenges.

    READ MORE: SBP foreign exchange reserves fall to $7.5 billion

    Latest investment data revealed the foreign direct investment plunged by 52 per cent in first four months of the current fiscal year.

    The current account deficit recorded a contraction in the first four months of the current fiscal year, but it swelled when compared with the previous month.

    Pakistan needs foreign inflows on urgent basis to avoid balance of payment crisis. The foreign exchange reserves of Pakistan fell sharply during past few months making it difficult for the government to fulfill its foreign repayment commitments.

    Official foreign exchange reserves of State Bank of Pakistan (SBP) have depleted by $327 million by week ended November 25, 2022 leaving import cover of only one and half months.

    READ MORE: Pakistan official reserves fall to around 1 ½ months import coverage

    The official foreign exchange reserves of the SBP fell by $327 million to $7.499 billion by week ended November 25, 2022 as compared with $7.826 billion a week ago.

    The import bill of the country was at $4.71 billion in October 2022, according to Pakistan Bureau of Statistics (PBS). According to the month import bill the existing foreign exchange reserves of the SBP have reduced to cover only 1.56 months import payment.

    The central bank attributed the decline in official reserves to repayment against external debt.

    READ MORE: Pakistan forex reserves inch up to $13.796 billion

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.647 billion.

    The total reserves of the country fell by $267 million to $13.378 billion by week ended November 25, 2022 as compared with $13.645 billion a week ago.

    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 $13.850 billion.

  • Pakistan unable to bear heavy energy import bill amid challenges to economy: PM

    Pakistan unable to bear heavy energy import bill amid challenges to economy: PM

    MANGLA: Prime Minister Shehbaz Sharif on Monday said that Pakistan is unable to bear the cost of heavy energy import bills in a situation when the economy is facing immense challenges.

    He said Pakistan was in dire need of generating cheap electricity as the energy import bill exorbitantly touched $27 billion.

    He was addressing the inaugural ceremony of the refurbishment project of Units 5 and 6 of the Mangla Dam Hydroelectric Power Plant, carried out with the support of the United States Agency for International Development (USAID).

    READ MORE: SBP denies restricting import payment for petroleum products

    PM Shehbaz Sharif said Pakistan, which was already facing immense challenges of economic stability, could not bear the heavy costs of energy import bills and thus needed to utilize alternative sources of electricity production.

    He regretted that in 75 years, both democratic and military rulers were responsible for not building sufficient dams to meet the energy needs.

    “Had the water reservoirs built on time, the country’s energy import bill would not have swelled to $27 billion,” he said, pointing out that “powerful lobbies and cartels” did not let materialize the construction of dams and launch of solar power projects.

    READ MORE: New petroleum prices in Pakistan effective from December 01, 2022

    Also, in the wake of recent flash floods in the country, he said, dams were crucial to mitigate the effects of climate change.

    The prime minister termed the assistance of USAID for the refurbishment of the units of Mangla dam as a “wonderful example of cooperation” between Pakistan and the United States.

    He lauded the valuable grant of $150 million by USAID along with the financial support by the Development Agency of France amounting to 90 million euros besides another pledge of 65 million euros. Also, WAPDA (Water and Power Development Authority) contributed $178 million (Rs 20 billion) from its own resources, he said.

    READ MORE: Shell Pakistan signs ABHI for voluntary carbon compensation offer

    He expressed satisfaction over the interest of the U.S. to carry out an extension programme of the country’s largest Tarbela dam.

    Shehbaz Sharif said the 75-years-old friendship and bilateral relationship between Pakistan and the U.S. had further strengthened at the levels of trade and investment.

    United States Ambassador Donald Blome said the Mangla dam was a great symbol of U.S.-Pakistan cooperation and added that the U.S. was also assisting WAPDA in increasing the power generation capacity of the Tarbela and Gomal Zam dams.

    He said maintenance and upgrades of dams were of critical importance in the wake of climate change and expressed hope that the green alliance between the two countries would prove beneficial for the energy and agriculture sectors of Pakistan.

    READ MORE: PYMA urges government not to impose regulatory duty on yarn

    The General Electric Hydro France Project Director said despite the challenges of the COVID-19 pandemic, the suspended projects of refurbishment were carried out effectively.

    He mentioned that six more units of Mangla dam would also be refurbished in the future.

    Chairman Water and Power Development Authority (WAPDA) Lt Gen (retd) Sajjad Ghani said the refurbishment of the units of Mangla dam was in line with the keen interest of the federal government to provide clean, green and cheap energy to the people of the country.

    He said WAPDA had not only initiated new hydropower projects, but also been rehabilitating

    and upgrading its existing hydel power stations including Mangla to maximize the ratio of environment-friendly and low-cost hydel electricity in the national grid.

    Prime Minister of Azad Kashmir Sardar Tanveer Ilyas, Special Assistant to PM Tariq Fatemi, Secretary Water and Power Division Hassan Nisar, and senior officials were present.

    The prime minister also visited the refurbished units of the dam, where he was given a detailed briefing about the project.

  • Pakistan purchases 450,000 metric tons wheat from Russia

    Pakistan purchases 450,000 metric tons wheat from Russia

    ISLAMABAD: Pakistan is purchasing of 450,000 metric tons wheat from Russia as country’s economic coordination committee approved a bid of a Russian company.

    The Economic Coordination Committee (ECC) of the Cabinet met on Monday which was presided over by Finance Minister Ishaq Dar.

    READ MORE: Saudi Arabia extends term of $3 billion deposit for Pakistan

    Federal Minister for Power Khurram Dastgir Khan, Federal Minister for Industries and Production Syed Murtaza Mahmud, Shahid Khaqan Abbasi MNA/Ex-PM, Minister of State for Finance and Revenue Dr. Ayesha Ghous Pasha, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, SAPM on Government Effectiveness Dr. Muhammad Jehanzeb Khan, Federal Secretaries and other senior officers attended the meeting in person while Federal Minister for Commerce Syed Naveed Qamar, Minister of State for Petroleum Musadik Masood Malik, Coordinator to PM on Commerce and Industry Rana Ihsan Afzal and Governor SBP, MD PASSCO joined the meeting through Zoom.

    READ MORE: Pakistan exports plunge 18.34pc in November 2021

    Ministry of National Food Security and Research submitted a summary on Award of 7th International Wheat Tender 2022 opened on November 30, 2022.

    Keeping in view results of 7th International tender and G2G offer, the ECC approved the lowest bid from M/s Cereal Crop Trading LLC at $ 372/MT for supply of 130,000 MT at Karachi ports for the shipment period from 16th December, 2022 8th February, 2023.

    READ MORE: SBP foreign exchange reserves fall to $7.5 billion

    The ECC also granted approval of the offer of M/s Prodintorg , Russia on Government to Government (G2G) basis at $ 372 /MT for supply of 450,000 MT at Gwadar Port for shipment period from 1st February, 2023 to 31st March, 2023.

    It was decided that any additional cost on inland transportation from Gwadar Port will be borne by PASSCO to be recovered from provinces at the time of release of wheat stock.

    READ MORE: Pakistan slaps 5pc regulatory duty on yarn import

    The ECC also approved proposal of Finance Ministry to change the title of the revolving fund account for CPEC Independent Power Producers from “Pakistan Energy Revolving Fund” to “Pakistan Energy Revolving Account”.

  • Pakistan sets up commission to eradicate black economy

    Pakistan sets up commission to eradicate black economy

    Pakistan has constituted a high powered commission for making suggestion to end the black economy or parallel economy. Finance Minister Ishaq Dar last week constituted a high powered tax commission for identifying bottlenecks in tax system and recommending pro-economic policies.

    (more…)
  • Commercial banks urged to withdraw appeals in Riba case

    Commercial banks urged to withdraw appeals in Riba case

    ISLAMABAD: A leading scholar of the country on Sunday urged commercial banks to withdraw their appeals against the order of Federal Shariat Court (FSC).

    The FSC judgment declared that Riba (usury) is Haram and prevailing banking system with interest system should be abolished forthwith.

    READ MORE: State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    State Bank of Pakistan (SBP) and National Bank of Pakistan with other six commercial banks filed a review before the Supreme Court against the judgment of the FSC.

    Recently, the SBP and NBP reportedly withdrew the appeals. However, private banks are still in litigation to contest the judgment of FSC.

    “The private banks should withdraw their appeals to annul the judgment of the Federal Shariat Court (FSC) against the Riba (usury),” said Hafiz Muhammad Tahir Mehmood Ashrafi, Prime Minister’s Special Representative for Interfaith Harmony and the Middle East Hafiz Muhammad Tahir Mehmood Ashrafi, while talking to the state media.

    READ MORE: KCCI demands implementation of Riba free banking

    He said the government had taken practical steps by withdrawing appeals of national and state banks from the apex court in a bid to get rid of the interest-based economic system.

    Ashrafi, who is also the chairman of Pakistan Ulema Council, assured the government all-out support of Ulema and Mashaykh in the implementation of FSC’s decision in letter and spirit.

    He proposed all the financial institutions devise a combined strategy to make the country’s economic system free of interest which was totally against the divine commands.

    He also urged the government to take stern action against the people who were allegedly involved in an interest-based system at the local level.

    READ MORE: SBP seeks Supreme Court guidance on Riba case judgement

    He said Pakistan, currently, was facing a critical financial crisis and its solution was lying in political stability and improved law and order situation in the country.

    He urged all the religious and political parties to unite on one platform and help cope with burgeoning polarization, extremism, and the new wave of terrorism with collective efforts.

    He also appealed the Pakistan Tehreek-e-Insaf Chief Imran Khan to come to the table-talk to evolve consensus on the ‘Charter of Pakistan’ as it was the need of the hour and it would help control increasing violence in the society and improve the ailing economy of the country.

    He proposed that the way ‘Message of Pakistan’ was designed to promote religious harmony in all sections of the society, there should be long-term policies on the country’s social, economic, and foreign affairs issues in the shape of ‘Charter of Pakistan’ and it should be implemented by all the governments to come and national institutions in the larger national interest.

    READ MORE: IPS demands implementation of court judgment on Riba

    Ashrafi emphasized that Pakistan had to go out of the box in the matter of its foreign policy as there was a paradigm shift in the external affairs of the Islamic and Arab world.

    He also thanked the Saudi leadership for extending the term of deposit in the State Bank of Pakistan (SBP) from the Saudi Fund for Development.

    Expressing gratitude to Custodian of the Two Holy Mosques King Salman bin Abdulaziz and his Crown Prince Muhammad bin Salman, he said the relationship between Pakistan and Saudi Arabia was like two brothers.

    He said Prime Minister Muhammad Shehbaz Sharif’s meetings with Saudi Crown Prince Mohammed bin Salman would yield further cooperation in the shape of Saudi investment in the days to come ahead in the country.

    “Similarly, other Islamic countries are also increasing trade and economic cooperation with Pakistan,” he said expressing the hope that there would be good news from the United Arab Emirates, Qatar, Turkey and Saudi Arabia in the near future.

    Ashrafi hinted that there was a big hand of the external forces and anti-state elements behind an organized smear campaign against the national security institutions and armed forces.

    “We must counter the concocted propaganda of our arch enemy against our national defense institutions and Pakistan Army with a pragmatic approach instead of becoming part of it,” he maintained.

  • Separate property declaration under Section 7E only for returns already filed

    Separate property declaration under Section 7E only for returns already filed

    A separate declaration for immovable property income has been allowed only for those returns filed prior October 13, 2022.

    The FBR issued SRO 2068(I)/2022 dated December 01, 2022 to enforce the draft amendments issued through SRO 2052(I)/2022 dated November 22, 2022.

    As per the instant SRO 2068(I)/2022, the FBR said that where return has been furnished prior to coming into force of notification No. SRO 1891(I)/2022, dated October 13, 2022, the form specified in the said notification shall be furnished separately by December 31, 2022.

    Form 7E

    Through Finance Act, 2022 deemed income on immovable property has been imposed from tax year 2022 (July 01, 2021 – June 30, 2022) and declaration has been made mandatory of the deemed income along with annual return by December 15, 2022.

    READ MORE: Tax on deemed income from immovable property under Section 7E

    According the FBR, a new section 7E has been introduced through Finance Act, 2022 whereby for tax year 2022 and onwards, a resident person is treated to have derived income equal to five percent of fair market value of the capital assets situated in Pakistan which will be chargeable to tax at the rate of 20 per cent under Division VIIIC of Part I of First Schedule of the Ordinance.

    Following exclusions have been provided to which this section will not apply:

    (i) One capital asset owned by the resident person;

    (ii) Self-owned business premises from where the business is carried out by the persons appearing on the active taxpayer’s list at any time during the year;

    (iii) Self-owned agriculture land where agriculture activity is carried out by the person but excluding farmhouse and annexed land. Farmhouse has been defined in this section;

    READ MORE: Supreme Court discourages taxpayers seeking relief in show cause notices

    (iv) Capital asset allotted to —

    (a) A Shaheed or dependents of a Shaheed belonging to Pakistan Armed Forces;

    (b) A person or dependents of a person who dies while in the service of Pakistan armed forces or federal or provincial government;

    (c) A war wounded person while in service of Pakistan armed forces or federal or provincial government;

    (d) An ex-serviceman and serving personnel of armed forces or ex-employees or serving personnel of federal and provincial governments who are original allotees of the capital asset as duly certified by the allotment authority;

    (v) Any property from which income is chargeable to tax under the Ordinance and tax leviable has been paid;

    (vi) Capital asset in the first year of acquisition on which tax under section 236K has been paid;

    READ MORE: Member Customs assures swift clearance of export consignments

    (vii) Where fair market value of the capital assets in aggregate excluding capital assets mentioned in serial nos. (i) to (vi) above does not exceed rupees twenty-five million;

    (viii) Capital assets which are owned by a provincial government or local government;

    (ix) Capital assets owned by local authority, a development authority, builders and developers for land development and construction subject to the condition that such persons are registered with Directorate General of Designated Non-Financial Businesses and Professions.

  • Pakistani rupee may devalue to PKR 270 against dollar by year end: report

    Pakistani rupee may devalue to PKR 270 against dollar by year end: report

    KARACHI: Pakistani rupee likely devalue to PKR 270 against the dollar by end of the current fiscal year or June 30, 2023, a report said on Saturday.

    The report released by Topline Securities, predicted that rupee to reach PKR 270 by Jun 2023 with FY23 average of Rs241.

    READ MORE: PKR ends stable to dollar on $3 billion Saudi rollover

    With PKR likely to weaken further, inflationary pressure may persist even after 900bps increase in policy rate by SBP in last 1.5 years, the report added.

    Pakistan currency is going through lot of uncertainty in spite of 21 per cent fall in PKR against US Dollar in 2022 so far.

    Since 2019 Pakistan is following a market-based exchange rate regime. Even though official exchange rate remains in the range of Rs221-225 in recent past, black market rate is trading at a premium of more than 10 per cent at Rs240-250.

    READ MORE: SBP foreign exchange reserves fall to $7.5 billion

    The report said that since State Bank of Pakistan (SBP) has tightened rules for exchange companies, there is hardly any foreign currency supply in the open market except for few currencies available for travelers at a premium of 3 per cent.

    This reemergence of black market with 10 per cent difference, analysts at the Topline Securities believe, cannot continue for long as it has started affecting USD inflows especially inward remittances.

    Given low foreign reserves, it is highly likely that the official exchange rate will adjust to close to black market rate.

    READ MORE: Pakistan official reserves fall to around 1 ½ months import coverage

    As per their base case, the analysts expect PKR to reach Rs270 by Jun 2023 with FY23 average of Rs241. With PKR likely to weaken further, inflationary pressure may persist even after 900 basis points increase in policy rate by SBP in last 1.5 years.

    Now with SBP revising its FY23 estimate of CPI to 21-23 per cent, they think interest rates to remain at higher levels. In Base Case under IMF supervision this tightened monetary policy will continue in 2023 also. Though the analysts expect Consumer Price Index (CPI) inflation coming down to 14 per cent in FY24, but policy rate will remain around 15 per cent.

    READ MORE: PKR remains resilient against dollar, makes 26 paisas gain

  • Pakistan exports plunge 18.34pc in November 2021

    Pakistan exports plunge 18.34pc in November 2021

    ISLAMABAD: Pakistan exports have registered 18.34 per cent decline Year on Year (YoY) in November 2022 owing to import restrictions and slowdown in global demand.

    Data released by Pakistan Bureau of Statistics (PBS) on Thursday revealed that exports fell to $2.37 billion in November 2022 when compared with $2.9 billion in the corresponding month last year.

    READ MORE: Pakistan’s import restrictions help narrowing trade deficit by 27%

    Imports of the country recorded 33.60 per cent decline to $5.245 billion in November 2022 when compared with $7.9 billion in the same month of the last year.

    This resulted contraction in trade deficit of 42.46 per cent to the deficit of $2.876 billion in November 2022 as against $5 billion in the same month of the last year.

    READ MORE: Pakistan import bill falls by 12.72% in 1QFY23

    The decline in exports can be attributed to the restrictions imposed on imports which hampered industrial and export activities. Furthermore, global slowdown also added to export fall.

    Meanwhile, exports recorded a nominal decline of 0.63 per cent to $2.37 billion in November 2022 when compared with previous month of September 2022 at $2.38 billion.

    However, imports recorded an increase of 11.34 per cent to $5.24 billion on Month on Month (MoM) in November 2022 when compared with $4.71 billion in the previous month.

    READ MORE: Pakistan trade deficit narrows by 17% in 2MFY23

    This brings the widening of trade deficit by 23.59 per cent to $2.876 billion in November 2022 when compared with the deficit of $2.33 billion in September 2022.

    Overall trade deficit during first five months (July – November) 2022/2023 contracted by 30.14 per cent to $14.41 billion when compared with the deficit of $20.62 billion in the corresponding months of the last fiscal year.

    READ MORE: Pakistan’s trade deficit narrows by 18% in July 2022

    Exports of the country recorded 3.48 per cent decline to $11.93 billion during first five months of the current fiscal year as against $12.36 billion in the same months of the last year.

    Whereas, import bill fell by 20.15 per cent to $26.34 billion during the period of July – October of fiscal year 2022-2023 as against $32.98 billion in the same period of the last fiscal year.