Business

Dar directs FBR to take steps for achieving tax collection target

Published

1 year ago

Farwa

Dar directs FBR to increase its efforts to achieve true tax potential.
FBR faces a revenue shortfall of Rs225 billion for December 2022.
Revenue shortfall will now make it hard for government to convince IMF to revive its stalled programme.

Finance Minister Ishaq Dar has directed the Federal Board of Revenue (FBR) to make all possible efforts to achieve the true tax potential in the country as the body has missed the target for the outgoing month of December 2022.

The finance minister made the remarks while chairing a meeting on the revenue performance of FBR in Islamabad.

During the meeting, FBR Chairman Asim Ahmad gave a detailed presentation on revenue targets and performance of FBR for the months of November and December 2022.

It is pertinent to mention here that FBR faces a revenue shortfall of Rs225 billion for the outgoing month of December 2022; the tax collection machinery collected only Rs740 billion against the desired target of Rs965 billion.

This increased revenue shortfall will now make it hard for the government to convince the IMF to revive the stalled IMF programme without taking additional and substantial taxation measures such as a mini-budget for the current fiscal year.

The government is contemplating options for the imposition of Flood Levy in the range of 1% to 3% to fetch Rs60 billion. Other taxation measures towards direct taxation are also on the cards. But the government is in a catch-22 situation and has identified only those areas that earned lofty profits because across-the-board taxation during the time of prevalent stagflation might further erode already sluggish economic activities.

However, the FBR sources argued that the imports compression and lingering litigation in higher judiciary resulted in lowering the revenue collection target. They have conveyed to the IMF that the collection of pending revenue would be materialised till March 2023. So, the FBR’s annual target of Rs7.47 trillion would remain intact, they believe.

But independent analysts are of the view that it would be hard for the FBR to achieve the desired tax collection target of Rs7 trillion by the end of June 30, 2023. The FBR has so far collected Rs3.428 trillion in the first half (July-Dec) period of the current fiscal year against the desired target of Rs3.673 trillion. The FBR collected Rs2.9 trillion in the same period (July-Dec) of the last financial year 2021-22.

According to the official statement, the FBR has demonstrated a remarkable revenue collection performance in the first six months of the current financial year 2022-23 and has collected Rs3,428 billion for the first six months against Rs2,929 billion collected in the corresponding period of last year depicting an increase of 17%.

The FBR collected Rs740 billion for the month of December 2022 against Rs599 billion in the same month last year, showing an impressive growth of almost 24% compared to the same month last year. This performance is despite huge import compression and zero rating on petroleum.

Direct taxes collection continues to grow at a robust pace, which has shown a growth of 66% during December 2022 compared to December 2021, a clear indicator of the policy of shifting the tax burden on the wealthy and affluent. Direct taxes collection for the first six months has also registered an unprecedented growth of 49%. This was achieved despite the fact that certain policy interventions having a revenue impact of Rs250 billion introduced through Finance Act 2022 could not be implemented as these are sub-judice in the courts. The target for the month of December was Rs965 billion, which could not be achieved due to the aforementioned reason.

The revenue collection performance is also exceptional when viewed in the context that the FBR has also issued refunds of Rs176 billion during the first half of the current financial year as against Rs149 billion during the corresponding period of last year.

Business

Over 500 points are lost by PSX stocks during intraday trading.

Published

3 hours ago

Farwa

The market saw a bearish trend as it dropped more than 500 points, just hours after Pakistan’s Stock Exchange (PSX) reached a new milestone by reaching the 73,000 mark.

As compared to the previous close of 72,742.75 points, the KSE-100 index dropped to 72,177.22 points, or 565.52 points, or 0.78% lower.
Expectations of an interest rate drop of up to 100 basis points during today’s Monetary Policy Committee (MPC) meeting, according to Intermarket Securities director of research CFA Muhammad Saad Ali, are driving market confidence.

The market is also being driven, he continued, by favourable news flow on upcoming negotiations with the International Monetary Fund (IMF) for a new programme.

Last Friday, the late-session purchasing fueled a 1% advance in the stocks, which helped them close close to 73,000 points. Dealers reported this.

Closed at 72,742.75 points on Friday, the benchmark KSE-100 index saw a gain of 771.35 points, or 1.07%.

Notwithstanding the turbulent session, according to Chase Securities analyst Muhammad Rizwan, “the market rebounded with a strong start and achieved a new all-time high.”.

“This impressive performance was driven by significant contributions from various sectors: fertiliser added 386 points, commercial banks contributed 174 points, the power sector provided 112 points, and cement added 93 points, collectively reversing the previous negative close and boosting market sentiment.”

Business

Despite global tides, Pakistan’s economy is recovering, according to Governor SBP

Published

3 hours ago

Farwa

Ahmad, who was speaking at the ICMA Pakistan Members Convocation, emphasised the country’s economy’s outstanding development while also highlighting the difficult macroeconomic environment of the previous year, which was marked by rising inflation, depleting foreign exchange reserves, pressure on exchange rates, and increased uncertainty.

Nonetheless, in the present times, the PKR has stabilized and the stock market is rising to unprecedented heights, reserves have increased to around US$8 billion despite large debt repayments, and inflation is dramatically decreasing.

Ahmad gave the government and SBP credit for their unwavering commitment to addressing macroeconomic difficulties head-on for this reversal.

Ahmad emphasized that the government’s efforts to reduce spending and achieve fiscal consolidation, together with the need for unpopular but necessary actions like the SBP’s increase of the policy rate to 22%, are producing beneficial results.

As global shocks like climate change, technology improvements, and cyber threats become more complex, he emphasises the significance of new viewpoints and creative solutions in tackling long-standing economic concerns.

Congratulating the graduating accounting professionals, Ahmad emphasized the importance of having a thorough understanding of accounting, finance, and economics in order to create workable solutions. He also urged the professionals to take a proactive approach to addressing new difficulties.

Ahmad emphasized the value of leadership abilities in policymaking and urged graduates to positively impact Pakistan’s economic landscape by working hard, being devoted to excellence, and contributing their full effort.

Along with giving a hearty welcome to Governor Jameel Ahmad and other SBP dignitaries, ICMA Pakistan President Shehzad Ahmed Malik also praised the SBP team’s efforts to stabilize the currency. With that, Ahmad presented the graduating CMAs with their degrees.

Business

The IMF board is anticipated to approve Pakistan’s $1.1 billion payout today.

Published

3 hours ago

Farwa

The IMF executive board meeting is scheduled to go until May 3, according to specifics. Based on the sources, it is expected that the international lender will approve Pakistan’s $1.1 billion payout today.

The State Bank of Pakistan is anticipated to obtain the final tranche from the IMF tomorrow, following approval, they added.

On July 12, 2023, Pakistan took advantage of a $3 billion loan package offered by the International Monetary Fund (IMF).

Thus far, Pakistan has been granted two installments totaling $1.9 billion: $1.2 billion in July and $700 million in January 2024.

On the last assessment of a $3 billion loan plan, Pakistan and the International Monetary Fund (IMF) came to a staff-level agreement last month.

Following their week-long visit to Islamabad, which ended on March 19, the IMF delegation made the announcement.

Global lender expressed its optimism that the incoming caretaker administration and central bank of Pakistan would persist in their efforts to stabilize the country’s economy, complimenting them on their “strong program implementation.”

In order to further solidify economic and financial stability, the new government is dedicated to carrying out the policy initiatives that were initiated under the existing Stand-By Arrangement for the balance of this year, the IMF official stated.

In June of last year, the IMF granted Pakistan’s economic stabilization program support through a critical nine-month agreement.