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.
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.
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.
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.
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.
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.
(more…)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.
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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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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KARACHI: The ministry of finance on Friday said that the fiscal deficit narrowed at 2.3 percent of the GDP during first half (July – December) 2019/2020 as compared with 2.7 percent in the corresponding half of the last fiscal year.
Analysts at Topline Securities said importantly though, the primary balance during the period clocked in at 0.7 percent of GDP (last year was -0.3 percent of GDP), within the target of 0.6 percent set by the IMF.
In the second quarter of 2019/2020, the fiscal deficit came in at 1.6 percent of GDP compared to first quarter of current fiscal year deficit of 0.7 percent of GDP.
All the four provinces recorded a budgetary surplus during the first half and second quarter of the current fiscal year.
During the first half of 2019/2020, total revenues increased by 39 percent YoY, where the improvement was led by 18 percent YoY higher tax revenues (however less than targeted) and 213 percent YoY higher non-tax revenues.
Looking into further breakup of revenues, government collected 17 percent YoY higher Direct taxes, 24 percent YoY higher Sales Tax and 68 percent YoY higher Petroleum Levy during first half of the current fiscal year.
The government hugely benefited from 575 percent YoY higher profits from State Bank of Pakistan (SBP) in the first half of the current fiscal year (also 31 percent QoQ higher in the second quarter of the current fiscal year), which is around 0.8 percent of GDP.
The fees fetched through the auction of telecom licenses (PTA profits: 607 percent YoY higher in the first half of the current fiscal year) also helped the government achieve the primary balance target.
On the expenditures front, total expenses increased by 26 percent YoY. Current expenditures increased by 25 percent YoY, where Mark-up Payments were up 46 percent YoY and Defense expenses were up 10 percent YoY. Excluding these items, government’s own expenses increased by 17 percent YoY during the first half of the current fiscal year (also up 49 percent QoQ in second quarter of the current fiscal year).
_ The development expenditure remained healthy, where growth of 28 percent YoY was witnessed in 1HFY20 and 122 percent QoQ in 2QFY20.