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Pakistan's Economy - News and Updates
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Path-Finder
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ejaz007
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Pakistan’s economy surviving on ventilator, says Dr Kaiser Bengali
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Due to a lack of implementation of policies in letter and spirit, which alone can improve the prevalent situation of Pakistan, the country’s economic situation has not been good at all and has been surviving on a ventilator, said economist Dr Kaiser Bengali on Wednesday.
Dr Bengali was the guest of honour at the Young Economists Conference 2020 held at the University of Karachi’s Department of Economics. The department’s faculty and students had arranged the conference on the theme of ‘Sustainable Growth and Economic Development in Pakistan’ at the Arts Auditorium.
The economist rejected the official figures, saying that they are not at all long-lasting. He stressed that the claims being made by the government are not factual.
He mentioned that Pakistan has gone to the International Monetary Fund 23 times for a bailout, warning that if the government did not make drastic changes in its policies, the country will have to go for another bailout in the future.
He said the past and present governments have focused only on increasing tax collection without realising the fact that they first need to reduce expenditures, establish new industries and create new sources to generate income.
He lamented that no government to date has adopted policies that can provide relief to the masses. Their policies are always meant to entertain and to provide more luxuries to the elites of the country, he said.
“New loans are taken out to repay old loans. No policy is in place that can bear fruitful results and bring betterment to the country. There has been no change in the mindset of the successive governments.”
Dr Bengali said governments do not reduce their expenditures but always sacrifice development projects and the funds allocated for them, because of which there are fewer proper facilities and infrastructure in the country, particularly in megacities like Karachi.
He said society cannot pay taxes so the entire burden has been shifted to the shoulders of the people who are associated with different services. He recommended that the government immediately ban non-essential items in the country to save foreign exchange.
He lamented that on the one hand tens of thousands of people are living below the poverty line and there is nothing for them, but on the other, we can easily find pet food and shampoos in stores, which is very irritating.
The economist said international companies are making a lot of money from the local market and take it to their own countries. He recommended that Pakistan should pay attention to developing its new industries and promote its agricultural products in local and international markets.
Right direction
Earlier, State Bank Deputy Governor Dr Murtaza Syed through his presentation shared the initiatives the government has adopted to improve the current economic situation of the country.
He said everyone should try to understand the causes of our economic challenges, the policies, actions and their impact, the near-term outlook and structural issues.
Import and export are major factors for foreign exchange of any country, and the rising fiscal deficits and public debt (public debt and fiscal balance) are necessary to tackle foreign exchange reserves, he added.
He also said the exchange rate flexibility has significantly turned around the current account. He hopes that further betterment will be brought by making more global exports and helping to rebuild international reserves.
He shed light on the fact that fiscal deficit has also been turned around driven by significant growth in tax revenues. He said the monetary policy has been tightened in response to rising inflation due to depreciation, taxes and energy prices.
He admitted that the economy has been slowing down, but hoped that improvement will be seen in the coming days, claiming that the policies are running in the right direction.
Future plans
Dr Naeemuz Zafar, the Sindh government’s chief economist, discussed the provincial administration’s development projects and said the people will see the results soon. He said productivity had not improved in the past but now things were gradually getting better.
He said goals cannot be achieved without sustainable products, and the federal and all the provincial governments should work on macro and micro levels to bring positive changes in society and in the economic conditions of the country.
He also shed light on the projects being initiated by the Sindh government as well as discussed what plans would be implemented in the near future.
Call for input
KU acting vice chancellor Prof Dr Khalid Mahmood Iraqi said economy is a very serious national matter, adding that all stakeholders must provide their input and work together to produce the best results for the country and for its bright future.
He said public policy can play a very important role in this regard, and urged that continuous and consistent policies are required to address all the challenges Pakistan is facing as regards the economy. He added that socio-economic development is necessary for the future of the country, and observed that the country’s revenue should be used for socio-economic development.
https://www.thenews.com.pk/print/62...urviving-on-ventilator-says-dr-kaiser-bengali
Listen
Due to a lack of implementation of policies in letter and spirit, which alone can improve the prevalent situation of Pakistan, the country’s economic situation has not been good at all and has been surviving on a ventilator, said economist Dr Kaiser Bengali on Wednesday.
Dr Bengali was the guest of honour at the Young Economists Conference 2020 held at the University of Karachi’s Department of Economics. The department’s faculty and students had arranged the conference on the theme of ‘Sustainable Growth and Economic Development in Pakistan’ at the Arts Auditorium.
The economist rejected the official figures, saying that they are not at all long-lasting. He stressed that the claims being made by the government are not factual.
He mentioned that Pakistan has gone to the International Monetary Fund 23 times for a bailout, warning that if the government did not make drastic changes in its policies, the country will have to go for another bailout in the future.
He said the past and present governments have focused only on increasing tax collection without realising the fact that they first need to reduce expenditures, establish new industries and create new sources to generate income.
He lamented that no government to date has adopted policies that can provide relief to the masses. Their policies are always meant to entertain and to provide more luxuries to the elites of the country, he said.
“New loans are taken out to repay old loans. No policy is in place that can bear fruitful results and bring betterment to the country. There has been no change in the mindset of the successive governments.”
Dr Bengali said governments do not reduce their expenditures but always sacrifice development projects and the funds allocated for them, because of which there are fewer proper facilities and infrastructure in the country, particularly in megacities like Karachi.
He said society cannot pay taxes so the entire burden has been shifted to the shoulders of the people who are associated with different services. He recommended that the government immediately ban non-essential items in the country to save foreign exchange.
He lamented that on the one hand tens of thousands of people are living below the poverty line and there is nothing for them, but on the other, we can easily find pet food and shampoos in stores, which is very irritating.
The economist said international companies are making a lot of money from the local market and take it to their own countries. He recommended that Pakistan should pay attention to developing its new industries and promote its agricultural products in local and international markets.
Right direction
Earlier, State Bank Deputy Governor Dr Murtaza Syed through his presentation shared the initiatives the government has adopted to improve the current economic situation of the country.
He said everyone should try to understand the causes of our economic challenges, the policies, actions and their impact, the near-term outlook and structural issues.
Import and export are major factors for foreign exchange of any country, and the rising fiscal deficits and public debt (public debt and fiscal balance) are necessary to tackle foreign exchange reserves, he added.
He also said the exchange rate flexibility has significantly turned around the current account. He hopes that further betterment will be brought by making more global exports and helping to rebuild international reserves.
He shed light on the fact that fiscal deficit has also been turned around driven by significant growth in tax revenues. He said the monetary policy has been tightened in response to rising inflation due to depreciation, taxes and energy prices.
He admitted that the economy has been slowing down, but hoped that improvement will be seen in the coming days, claiming that the policies are running in the right direction.
Future plans
Dr Naeemuz Zafar, the Sindh government’s chief economist, discussed the provincial administration’s development projects and said the people will see the results soon. He said productivity had not improved in the past but now things were gradually getting better.
He said goals cannot be achieved without sustainable products, and the federal and all the provincial governments should work on macro and micro levels to bring positive changes in society and in the economic conditions of the country.
He also shed light on the projects being initiated by the Sindh government as well as discussed what plans would be implemented in the near future.
Call for input
KU acting vice chancellor Prof Dr Khalid Mahmood Iraqi said economy is a very serious national matter, adding that all stakeholders must provide their input and work together to produce the best results for the country and for its bright future.
He said public policy can play a very important role in this regard, and urged that continuous and consistent policies are required to address all the challenges Pakistan is facing as regards the economy. He added that socio-economic development is necessary for the future of the country, and observed that the country’s revenue should be used for socio-economic development.
https://www.thenews.com.pk/print/62...urviving-on-ventilator-says-dr-kaiser-bengali
Path-Finder
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Tank131
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Quick question that may have already been talked about, but giving the precipitous drop in oil prices to the point where oil and gas closed in the negative just two days ago, what is Pakistan doing to buy and expand its oil reserves during the Coronavirus slow down. In fact the negative margin meant thst in order to continue pumping, producers were paying for the acquisition of and storage of the oil. Pakistan should use this time to greatly expand its acquisition of crude and store it in strategic reserves to bolster the economy when oil prices trend back upward.
Syed1.
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The oil that Pakistan buys is mostly from Saudi and it has not turned negative. It is still trading at about $20/barrel.
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Inability to generate desired revenue, meet expenses: Centre’s fiscal woes multiply
ISLAMABAD: Amid increasing discomfort of the powerful elites with the 18th Amendment and NFC award, the fiscal woes of the central government are multiplying because of its inability to generate the desired revenue and rationalize expenditures.
Simultaneously, the phenomena of ‘statistical discrepancy’ has again re-emerged on the fiscal front of the federal government, as it sharply rose to Rs781 billion in first nine months (July-March) of the current fiscal year 2019-20 against just Rs 22 billion in the corresponding period last year.
The amount of discrepancies had decreased in last couple of years but it re-emerged with the start of the current fiscal year and now it’s mounting at the supersonic speed. The increasing fiscal woes show that now the country’s total revenues are eaten up by debt servicing and defense after transferring resources to provinces under NFC Award.
For meeting all other heads of expenditures such as running of the government including salaries, pensions, development, and subsidies are managed through loans from domestic and external avenues.
The latest data of fiscal operation for first nine months (July-March) for 2019-20 showed that the debt servicing continued to remain the single largest ticket item on expenditures side as it consumed Rs1879.71 billion out of total collected revenues of Rs4,689 billion.
Out of total revenues of Rs3,044 billion collected bythe FBR, the provinces got share of Rs1931 billion through the federal divisible pool in shape of NFC Award. Then the remaining federal revenues, including the FBR and nontax revenues, could hardly meet the requirements of debt servicing and defense.
This indicates that the federal government starts its budgeting from minus and it has to obtain loans to fulfill the requirements of other expenditures heads. The higher discount rates that remained into bracket of double digit had increased requirement of debt servicing manifold as the data also shows that it consumed major chunk of the resources of the federal government.
The budget deficit that is considered as mother of all economic ills stands at Rs1,686 billion equivalent to 3.8 percent of Gross Domestic Product (GDP) during the first nine months of the current fiscal year against 5 percent of GDP in the same period of the last financial year. However, the primary balance that mainly concerns the IMF stands at just 0.4 percent of GDP. But the overall deficit that stood at 8.9 percent of GDP on eve of the last fiscal year 2018-19 that was now projected to escalate to over 9.6 percent of GDP in the aftermath of COVID-19 pandemic till end June 2020.
The fiscal operation for July-March period for 2019-20 shows that the total fetched revenues stood at Rs4,689.87 billion out of which the federal tax revenues stood at Rs3,273 billion, provinces Rs321.219 billion and nontax revenues of Rs1,019 billion.
Among nontax revenues, the government earned more money through the petroleum levy fetching Rs198 billion in nine months of the current fiscal so far against Rs141 billion in the same period of the last financial year.
Total expenditures incurred in first nine months escalated to Rs 6376 billion out of which current expenditures remained the largest head by consuming Rs5,611 billion. Out of total current expenditures, the mark-up of loans on both domestic and external fronts consumed Rs1879.712 billion than defense consuming Rs802.4billion
The federal development expenditures through PSDP stood at Rs340.4 billion, provincial development expenditures Rs382 billion and other development expenditures Rs29 billion.
https://www.thenews.com.pk/print/65...e-meet-expenses-centre-s-fiscal-woes-multiply
ISLAMABAD: Amid increasing discomfort of the powerful elites with the 18th Amendment and NFC award, the fiscal woes of the central government are multiplying because of its inability to generate the desired revenue and rationalize expenditures.
Simultaneously, the phenomena of ‘statistical discrepancy’ has again re-emerged on the fiscal front of the federal government, as it sharply rose to Rs781 billion in first nine months (July-March) of the current fiscal year 2019-20 against just Rs 22 billion in the corresponding period last year.
The amount of discrepancies had decreased in last couple of years but it re-emerged with the start of the current fiscal year and now it’s mounting at the supersonic speed. The increasing fiscal woes show that now the country’s total revenues are eaten up by debt servicing and defense after transferring resources to provinces under NFC Award.
For meeting all other heads of expenditures such as running of the government including salaries, pensions, development, and subsidies are managed through loans from domestic and external avenues.
The latest data of fiscal operation for first nine months (July-March) for 2019-20 showed that the debt servicing continued to remain the single largest ticket item on expenditures side as it consumed Rs1879.71 billion out of total collected revenues of Rs4,689 billion.
Out of total revenues of Rs3,044 billion collected bythe FBR, the provinces got share of Rs1931 billion through the federal divisible pool in shape of NFC Award. Then the remaining federal revenues, including the FBR and nontax revenues, could hardly meet the requirements of debt servicing and defense.
This indicates that the federal government starts its budgeting from minus and it has to obtain loans to fulfill the requirements of other expenditures heads. The higher discount rates that remained into bracket of double digit had increased requirement of debt servicing manifold as the data also shows that it consumed major chunk of the resources of the federal government.
The budget deficit that is considered as mother of all economic ills stands at Rs1,686 billion equivalent to 3.8 percent of Gross Domestic Product (GDP) during the first nine months of the current fiscal year against 5 percent of GDP in the same period of the last financial year. However, the primary balance that mainly concerns the IMF stands at just 0.4 percent of GDP. But the overall deficit that stood at 8.9 percent of GDP on eve of the last fiscal year 2018-19 that was now projected to escalate to over 9.6 percent of GDP in the aftermath of COVID-19 pandemic till end June 2020.
The fiscal operation for July-March period for 2019-20 shows that the total fetched revenues stood at Rs4,689.87 billion out of which the federal tax revenues stood at Rs3,273 billion, provinces Rs321.219 billion and nontax revenues of Rs1,019 billion.
Among nontax revenues, the government earned more money through the petroleum levy fetching Rs198 billion in nine months of the current fiscal so far against Rs141 billion in the same period of the last financial year.
Total expenditures incurred in first nine months escalated to Rs 6376 billion out of which current expenditures remained the largest head by consuming Rs5,611 billion. Out of total current expenditures, the mark-up of loans on both domestic and external fronts consumed Rs1879.712 billion than defense consuming Rs802.4billion
The federal development expenditures through PSDP stood at Rs340.4 billion, provincial development expenditures Rs382 billion and other development expenditures Rs29 billion.
https://www.thenews.com.pk/print/65...e-meet-expenses-centre-s-fiscal-woes-multiply
ziaulislam
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this is not sustainable
the center govt cannot hold on to power and keep the 18th amendment.
all subsides have to go to either the provinces and center should even hand over the power sector to provinces..
or scrap the NFC award which is unrealistic
i sure provinces cant handle all this devolution of power so quickly there is no setup for it
the center govt cannot hold on to power and keep the 18th amendment.
all subsides have to go to either the provinces and center should even hand over the power sector to provinces..
or scrap the NFC award which is unrealistic
i sure provinces cant handle all this devolution of power so quickly there is no setup for it
ejaz007
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3.8 percent budget deficit witnessed in 9 months
By ZAHEER ABBASI on May 7, 2020
A budget deficit of 3.8 percent or Rs1,687 billion has been recorded during the first nine months of the current fiscal year, July-March 2019-2020, ahead of corona pandemic expenditure and ramifications of lockdown on the revenue and economy of the country. On Wednesday, the Finance Ministry uploaded consolidated fiscal operation for July-March2019-2020, revealing highest spending on debt servicing and very little on social protection.
Of the total expenditure of Rs6376 billion or 14.5 percent of the GDP, highest expenditure was incurred on debt servicing of around Rs1,879 billion both the domestic and foreign with Rs1,646 billion on servicing of domestic debt and Rs234 billion on servicing of foreign debt followed by defense spending of Rs802.4 billion and development spending of Rs751.722 billion by both the federal and provinces with Rs340 billion by the federal government and Rs382 provincial during the first three quarters of the current fiscal year .
The government expenses on pension payments were Rs218.9 billion, public order and safety affairs Rs72.01 billion, Rs31.8 billion and Rs15.105 billion on social protection.
Of the total revenue collection of Rs4,689 billion during July-March 2019-2020, tax collection was Rs3,594 billion and non-tax revenue Rs1,033 billion.
In non-tax revenues, the government had collected Rs70.03 billion as mark-up on public sector entities, Rs26.05 billion as dividend, Rs635.5 billion as profit of the State Bank of Pakistan, and Rs113.1 billion as the Pakistan Telecommunic-ation Authority (PTA) profit.
Other component of non-tax revenue included Rs10.8 billion as defence receipts, Rs16.3 billion on account of passport fee, and Rs10.5 billion for discount retained on crude oil.
Rs65.5 billion was received on account as royalties on gas and oil, Rs4.6 billion as windfall levy against crude oil, and Rs60.1 billion through other sources.
The FBR collected Rs3,044 billion during the first three quarters of the current fiscal year against the budgetary target of Rs5.5 trillion, which is now projected to remain around Rs3.9 trillion after the corona pandemic. Direct tax collection was Rs1,146 billion and indirect taxes contribution in revenue was Rs1,898 billion in total FBR collection, the government also collected Rs198 billion on account of petroleum levy.
https://www.brecorder.com/2020/05/07/595092/three-8-percent-budget-deficit-witnessed-in-9-months/
By ZAHEER ABBASI on May 7, 2020
Of the total expenditure of Rs6376 billion or 14.5 percent of the GDP, highest expenditure was incurred on debt servicing of around Rs1,879 billion both the domestic and foreign with Rs1,646 billion on servicing of domestic debt and Rs234 billion on servicing of foreign debt followed by defense spending of Rs802.4 billion and development spending of Rs751.722 billion by both the federal and provinces with Rs340 billion by the federal government and Rs382 provincial during the first three quarters of the current fiscal year .
The government expenses on pension payments were Rs218.9 billion, public order and safety affairs Rs72.01 billion, Rs31.8 billion and Rs15.105 billion on social protection.
Of the total revenue collection of Rs4,689 billion during July-March 2019-2020, tax collection was Rs3,594 billion and non-tax revenue Rs1,033 billion.
In non-tax revenues, the government had collected Rs70.03 billion as mark-up on public sector entities, Rs26.05 billion as dividend, Rs635.5 billion as profit of the State Bank of Pakistan, and Rs113.1 billion as the Pakistan Telecommunic-ation Authority (PTA) profit.
Other component of non-tax revenue included Rs10.8 billion as defence receipts, Rs16.3 billion on account of passport fee, and Rs10.5 billion for discount retained on crude oil.
Rs65.5 billion was received on account as royalties on gas and oil, Rs4.6 billion as windfall levy against crude oil, and Rs60.1 billion through other sources.
The FBR collected Rs3,044 billion during the first three quarters of the current fiscal year against the budgetary target of Rs5.5 trillion, which is now projected to remain around Rs3.9 trillion after the corona pandemic. Direct tax collection was Rs1,146 billion and indirect taxes contribution in revenue was Rs1,898 billion in total FBR collection, the government also collected Rs198 billion on account of petroleum levy.
https://www.brecorder.com/2020/05/07/595092/three-8-percent-budget-deficit-witnessed-in-9-months/
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