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  • Inflation is one of main challenges: finance ministry

    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.

  • Mark-up rate for general provident fund announced

    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.

  • Pakistan’s fiscal deficit narrows to 8.1 percent in FY20

    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.

  • Date extended to exchange Rs40,000 bearer prize bonds

    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.

  • Motor vehicle tax collection plummets by 15 percent to Rs16.73 billion

    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.

  • Coronavirus may deeply distort economic fabric of Pakistan: Hafeez Shaikh

    Coronavirus may deeply distort economic fabric of Pakistan: Hafeez Shaikh

    ISLAMABAD: Coronavirus led impacts are expected to deeply distort economic fabric of Pakistan, said Dr. Abdul Hafeez Shaikh, Advisor to the Prime Minister on Finance and Revenue.

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  • Commission constituted to review salary, perks of government employees

    Commission constituted to review salary, perks of government employees

    ISLAMABAD: The federal government has constituted a pay and pension commission to review existing salary and perks.

    According to the finance ministry, the government of Pakistan had constituted a Pay and Pension Commission, with effect from 14-04-2020.

    The Composition of the Commission shall be as follows:

    Mr. Wajid Rana, Former Federal Secretary, Chairman.

    Mr. Nazar Hussain Mahar, Retired Civil Servant, Member.

    Dr. Noor Alam, Retired Civil Servant, Member.

    Ms. Seema Kamil, President, United Bank Limited, Karachi, Member.

    Mr. Zubyr Soomro, Chairman, Board of Directors, National Bank of Pakistan, Member.

    Ms. Nausheen Ahmed, Company Secretary, ICI (Pakistan) Limited, Member.

    MEMBERS EX-OFFICIO

    Secretary, Finance Division, Government of Pakistan, Member.

    Secretary, Establishment Division, Government of Pakistan, Member.

    Secretary, Defence Division, Government of Pakistan, Member.

    Secretary, Finance Department, Government of Punjab, Member.

    Secretary, Finance Department, Government of Khyber Pakhtunkhwa, Member.

    Secretary, Finance Department, Government of Sindh, Member.

    Secretary, Finance Department, Government of Balochistan, Member.

    Secretary, Finance Department, Government of AJ&K, Member.

    Secretary, Finance Department, Government of Gilgit Baltistan, Member.

    An Officer of BS-21 of the Auditor, General of Pakistan, Government of Pakistan, Member.

    An Officer of BS-21, Controller General of Accounts, Government of Pakistan, Member.

    Joint Secretary (Regulations), Finance Division, Government of Pakistan, Member/Secretary.

    The terms of Reference of the commission are as following.

    i) PAY & ALLOWANCES

    a) Study the adequacy of existing Basic Pay Scale System and to evaluate the current salaries of Government employees throughout the federation including the provincial government and recommend measures for its improvement and uniformity. Also make recommendations for the streamlining of existing classification from BPS 1-22.

    b) Study the separations of existing Basic Pay Scales for specialized departments/occupations/cadres.

    c) Review of Special Scales such as Management Grades, Management Position Scales (MP Scales), Special Professional Pay Scales (SPPS), Project Pay Scales etc. and propose measures for uniformity and improvement.

    d) Review of admissible Regular allowance, Special incentives and all other allowances with a view to highlight prevalent distortions and recommend corrective measures.

    e) Review of existing perks and facilities and make recommendations, including possibility of their monetization.

    1)  PENSION

    To Review the Pension system of the Government of Pakistan:

    A) Highlight existing distortions and anomalies in the Pension Scheme and recommend remedial measures. Verify the sustainability of the current model after critically evaluating future liabilities through an actuarial study.

    B) Evaluate alternate system of Pension like defined contribution and setting up of pension funds in light of international best practices and recommend a system with clear timelines that is more efficient and sustainable, considering the available recourses.

    iii) To Review the existing incentive regime (honorarium and special rewards) and recommend improvement in it.

    iv) To evaluate and recommend legislative measures to protect and streamline Pay, Pension and Allowances regime for government employees.

    v) The Commission may, if so desired by the Government, make interim recommendation to provide interim relief, pending the submission of its final report.

    vi) The Commission shall have power to co-opt any person or agency to assist it in its deliberations>

    vii) The Finance Division shall provide Secretariat support to the Commission and the Commission shall make its recommendations within 6 Months of its constitution. While formulating its proposal/recommendations on the above terms of reference, the pay and pension commission would take into consideration the financial recourses of the Government.

    The scope of work of the Commission will include Federal and Provincial civil servants, other government servants, civilians paid from defence estimates, all Armed Forces/Civil Armed Forces personnel and holders of the posts in Management Scales and employees of such Public sector corporations/autonomous/semi-autonomous bodies, other than Banks and DFIs, which have adopted the scheme of Basic Pay Scales in toto.

    Employees of Public Sector Corporations/Autonomous/Semi-Autonomous bodies who are regulated under the Pay Scales prescribed by these organizations and the employees governed under the Industrial Relations Ordinance, 1969 and/or whose financial terms of service are settled through Collective Bargaining Agents, are executed from the scope of work of the Pay & Pension Commission.

  • Pakistan seeks $1.4 billion additional IMF loan

    Pakistan seeks $1.4 billion additional IMF loan

    ISLAMABAD: Pakistan has initiated negotiations with the International Monetary Fund (IMF) for an additional grant of $1.4 billion on fast track basis.

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  • FBR advised to enhance monitoring, enforcement for achieving annual targets

    FBR advised to enhance monitoring, enforcement for achieving annual targets

    ISLAMABAD: The ministry of finance has advised Federal Board of Revenue (FBR) to enhance monitoring and enforcement in order to achieve annual targets.

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