ISLAMABAD, July 12, 2024 – In a significant move aimed at managing fiscal responsibilities, the federal government of Pakistan has launched an initiative to evaluate and assess liabilities pertaining to its retirement benefit schemes.
(more…)Tag: finance ministry
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Rising coronavirus cases may impact revenue collection in second quarter
ISLAMABAD: The ministry of finance has said that the rising cases of coronavirus may slowdown economic activities and adversely impact revenue collection in second quarter (October – December) of the current fiscal year.
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Budget deficit swells to 1.1 percent in first quarter
ISLAMABAD: The budget deficit has ballooned to 1.1 percent of the GDP for the first quarter (July – September) 2020/2021 as compared with the deficit of 0.7 percent in the corresponding quarter of the last fiscal year, according to fiscal statistics released by the finance ministry on Wednesday.
The size of GDP has been estimated at Rs45,567 billion by the end of first quarter of the current fiscal year as compared with the size of Rs44,003 billion in the same period of the last fiscal year.
The ministry said that the total revenue had declined nominally to Rs1478.75 billion during the first quarter of the current fiscal year as compared with Rs1,489 billion in the same quarter of the last fiscal year.
Tax revenue has also declined to Rs1,122 billion for the quarter under review as compared with Rs1,142 billion in the same quarter of the last fiscal year.
Out of the total tax revenue for the first quarter of the current fiscal year, the federal government contributed Rs1,011 billion and provincial governments contributed Rs111.76 billion.
The ministry said that non-tax revenue witnessed an increase to Rs356.35 billion during the first quarter of the current fiscal year as compared with Rs346 billion in the same quarter of the last fiscal year.
Out of total non-tax revenue, the federal government contribution was Rs336 billion and the share of provincial government was Rs20 billion.
Total expenditures have registered significantly to Rs1,963 billion during July – September of fiscal year 2020/2021 as compared with Rs1,775 billion in the corresponding quarter of the last fiscal year.
Current expenditure sharply increased to Rs1,812 billion during first quarter of the current fiscal year as compared with Rs1,582 billion in the same quarter of the last fiscal year.
Expenditure of mark-up payment increased to Rs742 billion as compared with Rs571 billion.
However, defence expenditure fell to Rs224 billion during first quarter of the current fiscal year as compared with Rs242 billion in the same quarter of the last fiscal year.
The government spent Rs215 billion on development projects during the first three months of the current fiscal year as compared with Rs147.17 billion in the corresponding period of the last fiscal year.
The fiscal deficit for the first quarter of current fiscal year was recorded at Rs484 billion as compared with the deficit of Rs286 billion in the same quarter of the last fiscal year.
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Govt. slashes prices of petrol, HSD
ISLAMABAD: The government on Saturday announced reduction in prices of petrol and High Speed Diesel (HSD) effective from November 01, 2020.
In a notification issued by the ministry of finance said that the government had decided to reduce prices of petrol by Rs1.57 per liter and HSD by Re 0.84 per litter.
The new prices effective from 12 midnight today are as follow:
MS Petrol Rs 102.40 per liter
HSD Rs103.22 per liter
Kerosene oil Rs65.29 per liter
Light Diesel Oil Rs62.86 per liter
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Inflation is one of main challenges: finance ministry
ISLAMABAD: The ministry of finance has said that economic growth is showing persistent recovery but the inflation is one of the main challenges.
According to monthly economic update issued on Tuesday, the finance ministry said that economic growth is showing persistent recovery in first quarter (July – September) 2020/2021.
In absence of any adverse future shocks, the economy is on its way not only to rebound from the pandemic related crises, but also to record a reasonable growth rate for the full fiscal year.
“Presently, inflation is one of the main challenges. However, the government is taking all possible measures to control it,” it said.
Together with measures that ensure sufficient supply of goods, especially food related production, it is expected that inflation will remain under control whereas policy measures will contribute to better functioning markets.
Most importantly, although domestic economic activity is expected to recover, still the risk of pandemic attack persists if the SoPs are not fully followed.
“Thus, Pakistan’s near-term economic prospects are promising subject to reducing uncertainty and restoring business confidence,” the ministry added.
Usually main drivers of the consumer price index (CPI) are international commodity prices, especially food and oil products, the exchange rate, growth of broad money and the policy interest rate.
“However, in Pakistan most recently, CPI remained driven by higher food prices, while non-food inflation remained moderated,” the ministry added.
Supply disruption in food related commodities was mainly due to extended monsoon season which has built inflationary pressure.
In recent weeks, the international food prices have rebounded somewhat, whereas oil prices declined and the Pak Rupee exchange rate slightly appreciated against the USD, thus easing out inflationary prospects.
There is no change in Indirect tax or other fiscal measures. Likewise, interest rate is kept same as per the policy interest rate in July 2020.
“Thus, accommodative Fiscal and Monetary Policy helped in controlling core inflation. The government is making all efforts to control inflation by smoothing supply even by expediting imports of sugar and wheat, which are considered as essential food commodities.
On weekly basis, impact can be predicted from decline of 0.23 percent in SPI on 22nd October 2020. This decline occurred after seven weeks.
On the basis of current economic scenario, headline inflation is expected to remain within a range of 7.3 to 9.3 percent in October 2020.
Economic recovery has been observed from the start of the new fiscal year.
Most importantly the decrease in number of Corona virus cases and the resumption of economic activities have contributed in dampening the negative impact of health crisis on the economy.
Economic recovery was seen in Q1 FY2021 and it is expected that this trend will continue but fears and risk factors are appearing due to the possible second wave of COVID, the ministry said.
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Mark-up rate for general provident fund announced
ISLAMABAD: The ministry of finance on Tuesday announced 12 percent mark-up rate on State Provident Fund i.e. General Provident Fund (GP Fund) for fiscal year 2019/2020.
The mark-up rate has been reduced to 12 percent for fiscal year 2019/2020 as against 14.35 percent for the fiscal year 2018/2019.
The mark-up rate for GP Fund for fiscal year 2017/2018 was 11.70 percent and for fiscal year 2016/2017 the rate was 11.3 percent.
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Pakistan’s fiscal deficit narrows to 8.1 percent in FY20
KARACHI: Pakistan’s budget deficit narrowed to 8.1 percent in FY20 (2019/2020) as compared with the deficit of 8.9 percent in the preceding fiscal year, according to statistics released by the ministry of finance on Wednesday.
Analysts Topline Securities said that as the deficit is lower than the 9.1 percent of GDP envisaged by the government owing to lower utilization of the Rs1.24 trillion COVID-19 relief package. Reportedly around Rs480 billion could not be spent during the year.
The primary deficit for the year clocked in at 1.8 percent of GDP or Rs757 billion (last year was 3.5 percent of GDP or Rs1,354 billion).
In 4QFY20, the fiscal deficit came in at 4.3 percent of GDP compared to 9MFY20 fiscal deficit of 3.8 percent of GDP due to implications of COVID-19 on both revenues and expenditures.
Sindh and Baluchistan recorded a budgetary surplus during FY20, with Punjab and KPK recording budgetary deficits during the period.
Total Revenues increased by 28 percent YoY in FY20, where the improvement was led by 257 percent YoY higher Non-Tax Revenues which includes Rs936 billion surplus profit from SBP.
The Tax Revenues increased by only 6 percent YoY during the year, where they declined by 12 percent YoY in 4QFY20 owing to COVID-19 outbreak. The government collected 5 percent YoY higher Direct Taxes, 9 percent YoY higher Sales Tax and 42 percent YoY higher Petroleum Levy during FY20.
In 4QFY20, as expected due to lockdown Direct Taxes and Sales Tax were down by 16 percent YoY and 15 percent YoY, respectively while Petroleum Levy was up 47 percent YoY.
On the expenditures front, Total Expenditure increased by 16 percent YoY in FY20. Current Expenditure increased by 20 percent YoY, where Mark-up Payments were up 25 percent YoY and Defense Expenditures were up 6 percent YoY.
In 4QFY20, Current Expenditure is up by 55 percent QoQ and 27 percent YoY due to COVID-19 related expenses.
The Development Expenditure remained steady (-1 percent YoY) in FY20, with 4QFY20 expenses rising by 37 percent QoQ but down 21 percent YoY.
In spite of the decline in interest rates, government interest bill increased by 24 percent QoQ and 17 percent YoY during 4QFY20 owing to greater borrowing at higher rates and interest payment schedule.
The analysts estimated that Pakistan’s fiscal deficit to clock in at around 8.5 percent of GDP in 2020/2021 due to continuing implications of COVID-19.
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Rules for treasury single account system notified
ISLAMABAD: The ministry of finance has notified Cash Management and Treasury Single Account Rules, 2020 under which treasury single account system has been explained.
According to the rules the Treasury Single Account system shall be:
(1) Federal Consolidated Fund Account, Public Account, assignment accounts, their sub-accounts and linked accounts as approved by the Finance Division, shall form part of the treasury single account system.
(2) Monies that have been appropriated through the Federal Government budget and have been transferred to scheduled bank accounts by Government offices shall be reverted to the non-food account No.1 of the Government by the 30th June 2020, as non-tax receipt of the Government as provided in sub-rule (3) of rule 4.
(3) Finance Division shall identify and notify all Government offices which are required to be included in the treasury single account system, after classification and evaluation of all existing bank accounts being maintained by such offices.
(4) Government offices that are fully funded through the Federal Government budget by using either local or foreign sources, including project and programme loans and grants, shall operate their bank accounts through treasury single account system and no cash operation shall be allowed outside the treasury single account. Assignment accounts, sub-assignment accounts and revolving fund accounts shall be used in case of local currency or foreign currency funding requirements. 7
(5) Any government investment, loan, grant, subsidy, equity, project or scheme either funded locally or through foreign aid shall be provided to government enterprises and offices through sub-accounts of treasury single account system including assignment accounts, sub-assignment accounts and revolving fund accounts opened in public account.
(6) Procedure for opening, operating and closing of assignment accounts including its sub-accounts and linked accounts shall remain operative as per Notification No. F.2(2)-BR-II/2008-948/18 dated 12.10.2018 issued by Finance Division, unless amended.
(7) The SBP or its banking agent NBP shall operate or cause to operate assignment accounts, sub-assignment accounts and linked accounts as approved by Finance Division according to assignment accounts procedure. Assignment account both for local currency and foreign currency shall be part of non-food account No. 1 of Government maintained by SBP. Principal accounting officers shall be responsible for overseeing operations of such accounts including request for approval from Finance Division for opening of assignment accounts.
(8) A request for opening of assignment accounts may be sent to Finance Division under existing procedure, available at www.finance.gov.pk. An assignment account shall be opened with designated branch of NBP for incurring expenditure under assignment accounts procedure.SBP and its agents shall be responsible for issuing bank statement for reconciliation and cooperate with Government offices as well as Finance Division for conflict resolution, if any.
(9) The Government offices using the assignment accounts shall be responsible for enforcing financial order and strict economy at every step and after observance of all relevant fiduciary rules and regulations. The Government offices shall ensure that not only the total expenditure is kept within the limits of the authorized ceiling but also that the funds allocated to spending units are expended in the public interest and for objects for which the money was allocated. In order to maintain a proper control, the Government offices shall put in place a monitoring mechanism to know not only of what has actually been spent from an appropriation but also what commitments and liabilities have been and will be incurred against it.
(10) The Government offices concerned shall maintain proper books of accounts and maintain receipt and revenue ledger and disbursement ledger so that the balance of receipt side shall correspond with the money deposited in receipt account. Similarly, expenses shall be reconciled with bank statement issued by SBP or its agents. 8
(11) The withdrawing entities shall be responsible for accounting of expenditure on a daily basis. On the basis of record and the bank statement, the drawing authorities shall render classified account of expenditure to the accounting offices on a monthly basis by 10th of each month for reconciliation of expenditure. The variations, if any, shall be reconciled and appropriate entries shall be made to update the accounting records. Monthly and quarterly release of funds shall be subject to reconciliation with accounting offices. The NBP shall report the account remaining undrawn against the authorized ceiling at the close of a financial year to accounting office in respect of each assignment account within a month.
(12) The SBP shall host and maintain treasury single account on behalf of the Federal Government. It shall provide electronic gateway system for necessary payment reports and ability to check the account balances online and real-time. The SBP shall collect information from commercial banks under section 31 of the Act and ensure provision of all information to the Finance Division to ensure implementation of the treasury single account system.
(13) Principal accounting officers, overseeing the Government offices on the instructions of Finance Division, shall close all bank accounts in commercial banks and provide evidence of such closure to Finance Division. Principal accounting officers shall transfer to treasury single account balances of accounts that contain public moneys appropriated through the Government’s.
(14) Accounting office’s shall ensure that no payment is made from the Federal Consolidated Fund without available budget, assignment accounts and sub-accounts are maintained for treasury single account system and that reconciliations are carried out on quarterly basis between book balances, bank statements and GFMIS.
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Date extended to exchange Rs40,000 bearer prize bonds
ISLAMABAD: The ministry of finance on Thursday extended the last date to exchange bearer prize bonds of Rs40,000 denomination up to December 30, 2020.
The last date to exchange the bearer prize bonds was expired on June 30, 2020.
The government on June 24, 2019 announced to discontinue the circulation of Rs40,000 denomination national prize bonds.
The State Bank of Pakistan (SBP) allowed the investors to exchange the unregistered prize bonds through three different modes. The SBP has barred the exchange of bearer prize bonds against cash.
However, the bonds can be redeemed against registered or premium prize bonds or can be converted into national saving schemes or face value (direct transfer to the bank account of bond holder).
The bearer instruments have been known as parking lot for undocumented economy. Therefore, the government launched registered prize bonds of Rs40,000 denomination in March 2017 which could be purchased against certain requirements including Computerized National Identity Card (CNIC) and valid bank account.
According to Central Directorate of National Savings (CDNS) data made available on Friday people surrendered around Rs256 billion bearer prize bonds of Rs40,000 denomination since the ban imposed June 2019 for documentation of the economy.
The data showed the total stock of investment made in bearer bonds of Rs40,000 denomination was Rs258 billion by May 2019. The remaining stock of bearer bonds is Rs2 billion by March 2020.
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Motor vehicle tax collection plummets by 15 percent to Rs16.73 billion
ISLAMABAD: The collection of motor vehicle tax has registered 15 percent decline during first nine months of current fiscal year, according to data released by the ministry of finance.
According to fiscal operation for first nine months issued by the finance ministry showed that the provinces had collected Rs16.73 billion during July – March 2019/2020 as compared with R19.64 billion in the corresponding period of the last fiscal year.
The provinces have mandate to collect motor vehicle tax.
The lower collection of motor vehicle tax attributed to slowdown in economy and the cases of coronavirus started appearing in the month of March 2020, which resulted in lockdown.
The major slump in collection recorded by the Punjab province, which posted 19.5 percent decline to Rs9.55 billion during first nine months of current fiscal year as compared with Rs11.87 billion in the same period of the last fiscal year.
The Sindh province posted 4 percent decline to Rs5.52 billion during July – March 2019/2020 as compared with Rs5.75 billion collected in the corresponding period of the last fiscal year.
The collection of motor vehicle tax by Khyber Pakhtunkhwa registered 18 percent decline to Rs1.14 billion during first nine months of the current fiscal year as compared with Rs1.39 billion collected in the same period of the last fiscal year.
The province of Balochistan collected Rs515 million during first nine months of current fiscal year as compared with Rs615 million in the same months of the last fiscal year, showing decline of 16 percent.