Pakistan's Economy - News and Updates

[jupiter2007]

Any information regarding government investment in IT field and possibility of building IT city in KPK.

 

[SSGcommandoPAK]

Just a joke though !

https://www.facebook.com/

 

[maithil]

Hafeez Shaikh rejects Asad Umar’s tax amnesty scheme model

The prime minister’s adviser on finance, Dr Hafeez Shaikh, rejected the design of the recently proposed tax amnesty scheme on Sunday, raising objections over the classification of assets and tax rates — marking a clear departure from the policies of his predecessor, Asad Umar.

In his first meeting with the Federal Board of Revenue (FBR), Shaikh asked the tax officials to come up with a more simplified version of the scheme.

He turned down the proposal to introduce six types of tax rates for various categories of assets, a finance ministry official told The Express Tribune.

Instead, Shaikh asked FBR officials to reduce the tax classifications to only two — which means that the Benami assets that would have attracted the highest rates under Umar’s model may now be cleared at the same rate set for other domestic assets.

Unlike Umar, Shaikh also did not rule out the possibility of more tax amnesty schemes in the future, the official said.

Shaikh acknowledged the need for offering a tax amnesty scheme because of the problems arising out of the enactment of the Benami Assets Prohibition Act.

However, he asked the FBR to focus more on the budget than spending too much energy on the amnesty scheme.

According to a handout issued by the finance ministry, the adviser “reviewed the proposed Assets Declaration Scheme 2019 in detail with FBR officials and instructed them to fine-tune the scheme to make it simple to understand and easy to implement.”

The discussion focused on the scope and the features of the scheme.

The objective of the scheme should be to make the economy more tax compliant and documented, Shaikh told the officials.

Shaikh was appointed the adviser to the prime minister on finance, revenue, and economic affairs on Friday – a position that he had earlier held between 2010 and 2013 during the tenure of then president Asif Ali Zardari.

Shaikh, who was living in the United Arab Emirates, first came to meet Prime Minister Imran Khan around 10 days ago when Umar was on a trip to Washington, according to sources.

It is unclear as to whether Shaikh has formally joined the Pakistan Tehreek-e-Insaf (PTI) or not.

The FBR official said Shaikh did not show urgency over the tax amnesty scheme and sought further deliberations.

https://tribune.com.pk/story/1956068/2-hafeez-shaikh-rejects-asad-umars-tax-amnesty-scheme-model/

 

[thunderkaka]

​

Japan to provide over Rs7bn for Pakistan’s health, transport sectors

TOKYO: The Japanese government on Tuesday agreed to provide over Rs7 billion for Pakistan’s health and transport sectors.

The announcement was made during Foreign Minister Shah Mahmood Qureshi’s three-day official visit to Tokyo at the invitation of his counterpart Taro Kono.

The visit has provided an opportunity to further build on the momentum of recent high level visits between the two countries, according to a statement issued by the Foreign Office.

Two MoUs relating to aid projects were signed between the two countries, according to which Tokyo will invest Rs7.4 billion in health and transport sectors. Rs4.85 billion will be given for extension of intensive care maternal and child health care centre and children’s hospital at PIMS in Islamabad and Rs2.55 billion for strengthening inspection capability of inland transportation cargo.
Foreign Minister Qureshi also urged Japanese companies to benefit from Pakistan’s special economic zones (SEZs) to cater the needs of not only local but also regional markets in a one on one meeting with his Japanese counterpart, which was followed by delegation level talks and a joint press briefing.

The two sides reviewed the entire spectrum of bilateral relations and identified areas for further cooperation in political, economic, trade, investment, education and cultural fields, according to the statement.

The foreign minister appreciated Japan’s role as Pakistan’s key development partner over the years and highlighted the areas of investment, human resource development, information technology, tourism and agriculture had potential to further deepen through mutually beneficial cooperation. The foreign minister also stressed that Pakistan with its geographical location at the cusp of the Middle East and Central Asia had the potential to become a manufacturing hub for Japanese companies.

While discussing the regional issues, Qureshi briefed FM Kono on Pakistan’s constructive role in Afghanistan aimed at peace and reconciliation, outreach efforts by the government with its eastern neighbour and deteriorating situation of human rights in the Indian Occupied Kashmir.

Minister Kono appreciated Pakistan’s efforts for peace and stability in the region. He termed the recent signing of the Memorandum of Cooperation on the Technical Internship Training Programme (TITP) as an important step towards entry of young Pakistani skilled workers to the vast and vibrant market of Japan.
Addressing a joint press conference, Qureshi said both sides held in-depth discussions and agreed to enhance bilateral relation and promotion of cooperation in various fields.

Appreciating Japan’s role as premier development partner of Pakistan, the foreign minister said the country was ready to welcome Japanese investors in all sectors of economy. He, while conveying the special message of greetings and well wishes for the people and government of Japan on behalf of Prime Minister Imran Khan, invited Prime Minister Abe to visit Pakistan.

FM Qureshi said both countries had also agreed to continue joint efforts for peace and stability in the region.

Aso assured that the government of Japan would continue to contribute in trade and investment opportunities in Pakistan. He said both sides also exchanged views on the current developments in the region and reaffirmed their commitment to promote the goals of peace and prosperity of the region.

https://www.pakistantoday.com.pk/2019/04/23/pakistan-japan-agree-to-further-foster-bilateral-ties/

 

[thunderkaka]

Pakistan, South Korea sign $500mln framework deal

ISLAMABAD: Pakistan on Wednesday signed a framework agreement with South Korea for various development projects worth $500 million to be completed by 2020, a statement said.

Noor Ahmed, secretary Economic Affairs Division and Kwak Sung-Kyu, ambassador of the Republic of Korea signed the arrangement on behalf of their respective governments. The ceremony was also witnessed by Dr Abdul Hafeez Shaikh, adviser to the Prime Minister on Finance, Revenue and Economic Affairs.

“Under the signed Framework Arrangement (2018-20), Republic of Korea will provide long term concessional financing up to $500 million for execution of various development projects in health, information technology, communication, agriculture, and energy etc,” the government statement said.

Earlier, Kwak Sung-Kyu , Korean ambassador called on the adviser and discussed matters pertaining to enhancement of bilateral cooperation between the two countries.

“The adviser informed the envoy that Pakistan attached significant importance to its ties with the Republic of Korea which had so many layers of cooperation with Pakistan in both public and private sectors,” the statement added.

Shaikh appreciated the role and cooperation extended by the Korean government for development projects in Pakistan.

He said the economic relations between the two countries would be further strengthened with the passage of time and framework arrangement will enable Pakistan to seek financing from Korean Exim Bank for development of various infrastructure projects in Pakistan.

Sung-Kyu hoped that the arrangement would be instrumental in backing up the economic policies and initiatives being pursued by the new Pakistani government.

The agreement would go a long way in further strengthening bilateral cooperation,” the ambassador was quoted as saying in the statement. He also said

Korea would extend all possible cooperation for economic development of Pakistan, which would be greatly conducive to promoting bilateral relations in the years ahead. In February last, South Korea had increased workers’ quota for Pakistan that would help the country enlarge its workforce in the East Asian developed economy. Korea decided to increase the workers quota for Pakistan by 11 percent.

According to the Ministry of Overseas Pakistanis and Human Resource Development, the Ministry of Employment and Labour South Korea has increased Pakistan’s Labour quota for 2019 from 900 per year to 1,000 per year. It is worth mentioning here that over 8,000 workers had been proceeded South Korea since 2008.

https://www.thenews.com.pk/print/462470-pakistan-south-korea-sign-500mln-framework-deal

 

[maithil]

100 Billion dollars to be paid pack in next 6.5 years.

 

[aziqbal]

Pakistans foreign debt is almost $100 billion

Only 20% is owed to China

The Western 80% accounts for only 20% of Pakistan’s development

China’s 20% accounts for 80% of Pakistan infrastructure development

Do the math and check the results we are much better off with China over any western countries

 

[VCheng]

Pakistans foreign debt is almost $100 billion

Only 20% is owed to China

The Western 80% accounts for only 20% of Pakistan’s development

China’s 20% accounts for 80% of Pakistan infrastructure development

Do the math and check the results we are much better off with China over any western countries

If those numbers are true, then why even consider IMF? Why not seek a similar arrangement, or better, from China?

 

[ghazi52]

$110m wheat, $1.3b rice exported

Wheat worth US$ 110.355 million were exported during first eight months of current financial year as against the exports of US$ 12.577 million of the corresponding period of last year. According the data of Pakistan Bureau of Statistics, exports of the wheat during the period under review had witnessed about 777.44 percent growth as compared the same period of last year.

During the period from July-February, 2018-19, 513,124 metric tons of wheat were exported as against the exports of 65,822 metric tons of same period of last year, which was up by 777.44 percent, it added.

 

[Path-Finder]

 

[Path-Finder]

https://twitter.com/x/status/1127223907726053377

 

[TheDarkKnight]

If those numbers are true, then why even consider IMF? Why not seek a similar arrangement, or better, from China?

Chinese loans are truely “developmental” in nature - in order to carry out the development only chinese state owned companies are contracted with closed door dealings and no open bidding of-course. Most of the Labor is then “imported” from China as well, who carry out these projects at lightening speed. In short all the money flows back to China, with you ending up with the “development” and a loan to payback + interest. Western loans are basically loans in pure sense - that is you get money inflows in your account but have to payback with interest. This money is used mostly by your free will for balancing your budget.
We cannot replace or refinance the western loans with these types of chinese loans - western banks would want their money back with interest and won’t accept chinese “development” in exchange for the money that Pakistan owes.

What Pakistan needs to do is 1) show that we can control our budget deficit, which I think only IMF can ensure - I dont know of anyother independent body that can ensure this 2) refinance these loans once budget deficit has been under control 3) make necessary reforms to get on a sustained growth path, in the breathing space once secured from IMF and refinancing.
@Nilgiri @ziaulislam

 

[Path-Finder]

Economic performance in 4-year report card, failing grade for PML-N
By Shahbaz Rana
Published: December 4, 2017
ISLAMABAD : The Pakistan Muslim League-Nawaz (PML-N) promised much in its election manifesto but delivered little in terms of economic performance.

The gap between what was said and what was done has pushed the country into a deep debt trap, increased income inequality, and an increasing number of question marks hovering over the economic outlook.

Foreign investors are concerned by macroeconomic indicators, and the possibility of Pakistan needing another bailout is much more real than ever before.

Barring progress on the pace of inflation and increasing national output, which grew from 3.7 per cent to 5.3 per cent in four years, the government’s performance remained questionable on all economic fronts. Even the annual economic growth of 5.3 per cent in the fiscal year 2016-17 was the result of growth in the services sector, which is not labour intensive.

In its election manifesto, the government had promised to increase the economic growth rate to 6 per cent by the end of the fourth year, and 7 per cent by June 2018.

PPP, PML-N agree to work together to avert technocrat govt

According to a report from the International Food Policy Research Institute, Pakistan remains near the bottom of the Global Hunger Index, standing at 106 among 119 developing countries ranked.

In June 2013, the official unemployment rate in the country was 6.24 per cent, but due to growing joblessness, the government has not announced unemployment figures for the last two fiscal years, showed a State Bank of Pakistan report.

The literacy rate, which was 60 per cent in 2013, actually slipped to 58 per cent in June 2016. Figures for the current year have not been released yet. Health expenditure, which stood at a meagre 0.56 per cent of total national output in 2013, has been decreased even further to 0.46 per cent in June 2017, according to the SBP’s annual report on the state of the economy.

In its latest report, which covered the four-year economic performance of the PML-N, the Policy Research Institute of Market Economy (PRIME) noted that the incumbent government has failed to fully implement its election manifesto on the economic front and has achieved just six of its 89 announced goals.

According to the report, progress has been reversed on the elimination of VIP culture by reducing expenses on the Prime Minister’s office and the Presidency, appointing independent professional boards of state-owned entities, eliminating circular debt, and notifying the tariffs determined by the National Electric Power Regulatory Authority.

Even in areas where it had initially shown some progress, performance deteriorated during the January-June 2017 period, says the report from the Islamabad-based, independent think tank.

Growing debt burden

Former finance minister Ishaq Dar claimed that Pakistan’s economy had turned around and the country did not need another International Monetary Fund (IMF) bailout. However, the situation has already worsened. From July through October of this fiscal year, the federal government has obtained $2.3 billion in foreign loans, including $1.02 billion in commercial loans.

PML-N’s economic scorecard: a story of under-performance

A team of Finance Ministry and SBP officials is already in the United States to raise between $2 billion and $3 billion from the debt markets by floating sovereign bonds aimed at creating some space till the time a new programme is negotiated with the IMF, sources said.

The country’s official foreign currency reserves, which peaked to $19 billion, slid on the back of foreign borrowings to $13.54 billion as of November 17, barely enough to finance two-and-a-half months of imports.

The federal government consumed a significant amount of foreign currency reserves to manage the rupee-dollar exchange rate parity while turning down proposals to let the currency devalue to its ‘real value’ of around Rs118 to a dollar. The current parity is Rs105.4 per dollar.

The biggest criticism against the incumbent government, however, is the massive increase in external debt and liabilities, which have increased to $83 billion as of June 2017. In June 2013, a few weeks after the PML-N government came into power, external debt and liabilities stood at $61 billion.

The government is also accused of twice amending the Fiscal Responsibility and Debt Limitation Act of 2005 in an effort to understate the growing debt burden. Against the total debt of Rs15.56 trillion in June 2013, the country’s total debt has now increased to Rs24 trillion, which is equal to 75.3 per cent of the GDP and far above the ‘safe’ threshold.

Since the government has not been able to enhance exports and attract significant foreign direct investment, the external sector has remained under pressure. In June 2013, the current account deficit – the gap between external receivables and payments – was $2.5 billion or 1.1 per cent of the GDP. The government closed the fiscal year 2016-17 at a record deficit of $12.1 billion, equal to 4 per cent of the GDP.

PML-N’s performance in two years – a blend of effort and luck

That record is likely to be short lived, as the government has already booked a $5-billion current account deficit during the July-October period.

Exports, which stood at $24.5 billion in June 2013, have decreased to $20.42 billion as of June 2017, according to the SBP annual report.

Poor fiscal performance

In June 2013, the country had booked Rs1.834 trillion as its budget deficit, equal to 8.2 per cent of GDP. This figure was inclusive of the Rs480-billion circular debt payment the PML-N government cleared after coming into power, but booked in the last year of the PPP tenure.

However, at the end of the fiscal year 2016-17, the budget deficit widened to a record Rs1.864 trillion, excluding Rs800 billion as circular debt. In terms of GDP, the 2016-17 budget deficit was equal to 5.8 per cent of GDP, which was far higher than the 4.1per cent limit approved by parliament. After including the impact of unsettled circular debt, the budget deficit as a percentage of GDP would increase to the same level in the last fiscal year that the county witnessed in 2013.

The extremely poor position of the fiscal and external fronts belies the official claims of turning around the economy. Instead, the worsening situation forced the chief of army staff to give a wakeup call to the government. The army chief warned the authorities about the “sky-high debt” and “abysmally low tax base”.

In June 2013, the FBR’s tax-to-GDP ratio was 8.7 per cent, which increased to 10.5 per cent in 2016-17, but remained far below the government’s target of 15 per cent. In absolute terms, the FBR’s tax collection increased from Rs1.946 trillion to Rs3.361 trillion due to the imposition of roughly Rs1.4 trillion in new taxes.

The government also failed to meet its promise of rationalising sales tax by ensuring standard rates for all items.

Nawaz tells party MPs to improve performance

In fact, a recent World Bank report suggests that Pakistan is losing Rs3.2 trillion in revenue every year due to weak tax compliance and enforcement.

Core macroeconomic indicators remain disappointing

The government failed to show notable progress on the two most critical macroeconomic areas – investment and national savings. The investment-to-GDP ratio inched up from 15 per cent in June 2013 to 15.8 per cent four years later. It was well below the government’s targets, and Dar would conveniently fail to bring it up.

The PML-N always boasts of promoting private investment in the country — a claim far from reality. In June 2013, private sector investment was 9.8 per cent of GDP. At the end of June 2017, it stood at 9.9 per cent, according to the SBP report.

The same is the case with national savings. In June 2013, Gross National Savings as a percentage of GDP was 13.9 per cent, which actually decreased to 13.1 per cent in June 2017.

PSEs’ performance

Another poorly managed area was the functioning of Public Sector Enterprises. The PML-N government claimed that it would privatise all loss-making enterprises and reduce their losses. The numbers tell a different story.

PML-N to grill ministers over performance

In June 2013, the PSEs’ debt and liabilities were Rs495 billion. By June 2017, they had rocketed up to Rs1.107 trillion, according to the SBP annual report. There was a net 123 per cent increase in PSEs’ losses in just four years. This was primarily because the government did not settle the circular debt and parked huge sums outside the budget.

In the energy sector, the government was unable to reform Nepra. Likewise, reforms could not be introduced in power distribution and generation companies. These entities kept causing heavy losses, which the government tried to cover by charging various surcharges from consumers.

The PML-N also failed to meet its election promise of permanently eliminating circular debt, which has piled up to Rs400 billion. By including the stock of debt that is parked in a holding company, the total circular debt would jump to Rs800 billion.

The government somehow managed to build the confidence of the private sector, but it was still not up to the mark. The two components where it performed well were infrastructure building and creating job opportunities.

There was no development on the goals of converting at least 50 per cent of remittances from overseas Pakistanis into investments and reforming tariffs to eliminate anti-export bias. The PML-N could not establish an equity fund to facilitate investment from the private and public sectors. It also could not fulfil its promise to tax all income, including agriculture income, and failed to reduce the number of federal and provincial taxes, according to PRIME.

 

[VCheng]

Chinese loans are truely “developmental” in nature - in order to carry out the development only chinese state owned companies are contracted with closed door dealings and no open bidding of-course. Most of the Labor is then “imported” from China as well, who carry out these projects at lightening speed. In short all the money flows back to China, with you ending up with the “development” and a loan to payback + interest. Western loans are basically loans in pure sense - that is you get money inflows in your account but have to payback with interest. This money is used mostly by your free will for balancing your budget.
We cannot replace or refinance the western loans with these types of chinese loans - western banks would want their money back with interest and won’t accept chinese “development” in exchange for the money that Pakistan owes.

What Pakistan needs to do is 1) show that we can control our budget deficit, which I think only IMF can ensure - I dont know of anyother independent body that can ensure this 2) refinance these loans once budget deficit has been under control 3) make necessary reforms to get on a sustained growth path, in the breathing space once secured from IMF and refinancing.
@Nilgiri @ziaulislam

Any lender will have its own sets of rules and requirements, as you have described for China and IMF. It is up to Pakistan to decide what combination meets its own needs in the best possible way.

Let us see what PMIK decides in this regard, an under what conditions. No deal has been finalized as of yet I understand.

 

[Nilgiri]

Chinese loans are truely “developmental” in nature - in order to carry out the development only chinese state owned companies are contracted with closed door dealings and no open bidding of-course. Most of the Labor is then “imported” from China as well, who carry out these projects at lightening speed. In short all the money flows back to China, with you ending up with the “development” and a loan to payback + interest. Western loans are basically loans in pure sense - that is you get money inflows in your account but have to payback with interest. This money is used mostly by your free will for balancing your budget.
We cannot replace or refinance the western loans with these types of chinese loans - western banks would want their money back with interest and won’t accept chinese “development” in exchange for the money that Pakistan owes.

What Pakistan needs to do is 1) show that we can control our budget deficit, which I think only IMF can ensure - I dont know of anyother independent body that can ensure this 2) refinance these loans once budget deficit has been under control 3) make necessary reforms to get on a sustained growth path, in the breathing space once secured from IMF and refinancing.
@Nilgiri @ziaulislam

The Chinese do that for a reason. Every bit of forex they use (and their own currency is also tied at the hip to it essentially) for their loans is less of it they can use to hold up their own forex dam (to help with their internal economy employment level in the end and also nowadays to have as buffer for trade war). That means different set of conditions/costs/requirements of the loans they make to others. They tend to work more into the micro print to ensure there is some guaranteed return for them......whereas IMF/WB take on aura of more institutional type lenders who go for macro discipline etc.

That is why China will not offer anything like the IMF does to anyone generally....as far as such packages at this scale go.

It is like a lender lending to you (that has taken a loan already from previous lender)...he needs to charge the original rate (he took the loan at) and then his own rate on top...but has more discretion to do this in different ways because his USP is he is not the original guy and wont require you to get your house in order etc....but you gotta use more of his buddies/materials (i.e operating/deployment wise of the loan, less flexibility and choice for you). The cost always come from somewhere in the end....no matter which route you go.