Business

Pakistan to brief IMF mission on additional taxation measures today

Published

1 year ago

Farwa

Pakistan, IMF will kick-start toughest ever parleys from today.
IMF is asking govt to fill Rs600bn on fiscal front.
National Austerity Committee suggests all ministries slash expenditures.

ISLAMABAD: In order to break the deadlock with the International Monetary Fund (IMF) and pave the way for striking a staff-level agreement, the government is expected to share its plan with the visiting review mission for taking additional taxation measures, The News reported Tuesday.

The discussion will revolve around Pakistan’s plan for taking additional taxation measures to fetch over Rs200 billion through the Presidential Ordinance, rationalising expenditure, and hiking both electricity and gas tariffs for erasing the monster of the circular debt.

The IMF’s review mission led by Nathen Porter arrived in Islamabad on Monday and now both sides would kick-start toughest ever parleys from today (Tuesday) for making renewed efforts to accomplish the pending ninth review under the $7 billion Extended Fund Facility (EFF).

The Washington-based lender is suggesting the toughest prescriptions on all fronts of the economy at a time when the foreign exchange reserves are persistently on the decline and touched the lowest ebb of $3.6 billion.

Although, the government had already implemented two major conditions including allowing adjustment of the rupee against the dollar and hiking record levels of a surge in petroleum prices ahead of kick-starting parleys with the IMF.

The IMF is asking the government to fill the yawning gap of Rs600 billion on the fiscal front through additional taxation measures or cutting down on expenditures in order to restrict the budget deficit and primary deficit within the desired limits.

Differences persisted over the exact fiscal gap and both sides will hold parleys to evolve consensus over the exact estimates for taking additional taxation measures through the upcoming mini-budget.

Pakistan and the IMF will hold technical-level talks from today to Friday and then the policy-level talks will commence finalising the Memorandum of Financial and Economic Policies (MEFP) document.

The IMF further demanded an increase in electricity tariff within the range of Rs12.50 per unit as Islamabad seemed to agree to hike the electricity tariff of Rs7.50 per unit in a staggered manner.

The government may be agreed to withdraw the un-targeted power sector subsidies of the electricity and gas sector to powerful groups during the upcoming parleys with the IMF. The gas tariff will also be hiked in the range of 74% for consumers.

“We will have to swallow bitter pills because the gap widened so much that now the economy cannot run with the approach of status quo. The country’s middle class will have to face the burden.

“We have made a plan to protect vulnerable and poor segments of the society while implementing the IMF conditions” top official sources stated while talking to a select group of reporters on Monday night.

The senior officials in a background discussion stated that the government wanted to insulate the poorest of the poor from swallowing bitter pills as the government would make all-out efforts to focus on two areas including introducing reforms and protecting poor and vulnerable segments from arising inflationary pressures.

The official said that Finance Minister Ishaq Dar was trying to secure $4-5 billion from bilateral friends for engaging the IMF with the point of strength but it could not be materialised so there was no other option but to make renewed efforts to revive the stalled IMF programme.

The Federal Board of Revenue’s (FBR) high-ups are estimating that the recent devaluation of the exchange rate will help tax authorities jack up its revenue collection by Rs100 billion in the remaining period of the current fiscal year.

While referring to recommendations given by the National Austerity Committee to Prime Minister Shehbaz Sharif, the committee finalised recommendations to suggest all ministries including the Ministry of Defence slash expenditures by 15%.

The committee asks for surrendering all plots obtained by influential segments to more than one. In all, the committee’s recommendations if implemented could be Rs600-700 billion on a per annum basis. But there are big ifs and buts that who is going to implement these bold decisions which are now necessary to undertake for averting crisis situations.

Business

In intraday fluctuations, the rupee achieves a slight gain against the US dollar.

Published

31 mins ago

Farwa

The Pakistani rupee rose 0.04% versus the US dollar during early trading hours on Tuesday in the interbank market.

At 10 a.m., the rupee stood at 278.12 against the US dollar, up Re0.12 from the previous day’s finish of 278.24, which had seen a small decrease of Re0.03.

In a momentous development, Saudi Crown Prince Mohammed bin Salman is scheduled to visit Pakistan next week for important talks with Pakistani leaders.

These talks are scheduled to feature the signing of multiple Memoranda of Understanding (MoUs) targeted at increasing Saudi investment in industries such as agriculture, mining, human resources, energy, chemicals, and shipping.

On the global front, the US dollar rose against the yen on Tuesday, as huge interest rate differentials weighed on the Japanese currency.

The US dollar climbed 0.22% to 154.235 yen in early Asian trading, adding to its 0.58% rise the day before. On Friday, the yen fell to its lowest level since April 10, weighed down by softer-than-expected monthly US jobs data and signals of likely Bank of Japan action.

Meanwhile, oil prices rose slightly after Israeli strikes on Rafah in Gaza, amid continued talks with Hamas over a truce. Brent crude prices increased 0.28% to $83.56 per barrel at 0400 GMT, while US West Texas Intermediate (WTI) crude futures rose 0.31% to $78.72 a barrel.

This increase comes after a reversal of last week’s slump, during which both contracts suffered their worst weekly losses in three months, fueled by fears about disappointing US job statistics and speculation about the timing of a Federal Reserve rate decrease.

Business

Saudi investment and falling inflation cause Pakistani stocks to soar.

Published

22 hours ago

Farwa

The benchmark KSE-100 Index increased by more than 1.50 percent on Monday, driven by the possibility of significant Saudi investment. Investors are now more optimistic that the central bank will soon begin a cycle of interest rate cuts, and another IMF programme is very much on the horizon.

The KSE-100 Index increased by 910.25 points, or 1.27 percent, by 1:29 pm PST to close at 72,812.34, having reached an intraday high of 73,060.74.

Additionally, on Monday, Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated that his nation preferred Pakistan’s economic growth and thought it was the best place to make investments.

The news is definitely good for equities that have been cheap since their market capitalization peaked in 2017, as many industries—energy, agriculture, technology, and mining being the primary ones—can now attract much-needed foreign investment.

The inflation of Pakistan

The consumer price index (CPI) for April increased by 17.3 percent, the lowest level since May 2022. This led to the benchmark index rising by 1244.45 points, or 1.76 percent, during the last session on Friday of last week.

This indicates that, like in March, annual inflation declined for the fourth straight month in April and stayed below the current record high interest rates of 22 percent. like a result, the State Bank of Pakistan may decide to begin reducing interest rates at its upcoming meeting on June 10.

While the pattern seen on Friday was also influenced by a market correction, the persistence of this most recent upswing indicates that investors are anticipating an economic recovery in the context of falling inflation and impending Saudi Arabian investment.

IMF APPEAL

In the meantime, the IMF continues to play a significant role in Pakistan, influencing not just public policy but also private sector initiatives and the lives of common citizens. Furthermore, the market was undoubtedly helped by the world’s largest lender’s most recent announcement of the upcoming transaction negotiations.

The Bretton Woods Institution said on Sunday that a delegation was scheduled to visit Pakistan this month to talk about a new initiative, prior to Islamabad starting the annual budget-making process for the upcoming fiscal year.

Although Pakistan’s $3 billion short-term programme helped prevent a sovereign default last month, Prime Minister Shehbaz Sharif’s administration has emphasised the necessity for a new, longer-term initiative.

The IMF responded to Reuters via email, saying that a mission is anticipated to visit Pakistan in May to review the FY25 budget, policies, and reforms under a proposed new programme for the wellbeing of all Pakistanis.

MERCURABLE BY SAMPLE

Meanwhile, it has been claimed that Saudi Crown Prince Mohammed bin Salman would pay a visit to Pakistan later this month. The kingdom has been making massive investments all over the world in an effort to become a more significant player in world affairs.

It makes sense that after years of political unrest and economic hardship, his presence and the Saudi investment will aid Pakistan in establishing itself as a desirable location for investors.

The explanation is straightforward: Saudi Arabia continues to be a significant actor in world politics. Nonetheless, the globe has begun to view MBS, the crown prince’s nickname, as a role model due to his policies of diversifying his nation’s economy and elevating the kingdom to a centre of commerce.

Business

Saudi investment is most suited for Pakistan, according to Ibrahim Al-Mubarak

Published

23 hours ago

Farwa

Ibrahim Al Mubarak, the deputy minister of investments for Saudi Arabia, stated on Monday that his nation thought Pakistan was the best place to invest and wanted to see it flourish economically.

Speaking at the opening ceremony of the two-day Pakistan-Saudi Arabia Investment Forum 2024 in Islamabad, he stated that Saudi entrepreneurs were open to making investments in a variety of industries and that a significant portion of Pakistanis were contributing significantly to the growth of the kingdom.

ON THE DRIVING SEAT: PRIVATE SECTOR

Muhammad Aurangzeb, the finance minister, stated in his speech that the private sector should take the “driving seat” in order to revitalise the economy.

The finance minister stated, “The ministers and bureaucracy would have to lay back,” adding that the role of the government was to establish a framework.

According to Aurangzeb, the finance ministry was always there to support traders and company owners as he pursued economic reforms as part of the government’s objective.

Using the better rupee exchange rate as an example, he claimed that successful policies were bringing about economic stability.

The minister also mentioned that the government was trying to draw in foreign investment, but he also emphasised the need for continued policies to maintain economic stability and urged collaboration between the public and private sectors to build a robust economy.

Investing in Saudi Arabia

A high-level group of 50 Saudi businesspeople and investors, together with government representatives, arrived in Pakistan earlier on Sunday to attend an event aimed at encouraging investment from the oil-rich Gulf State.

Continue reading: Saudi entrepreneurs arrive in Islamabad as Pakistan seeks foreign investment

This happened only a few days after Saudi Arabia hosted Prime Minister Shehbaz Sharif for a Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh. During his visit, he also had talks on a number of topics with Crown Prince Mohammed bin Salman.

SUMMARY CONVERSATIONS

The audience was informed by Commerce Minister Jam Kamal that every attempt would be made to facilitate international investors and have fruitful discussions between Pakistan and Saudi Arabia.

Representatives from thirty Saudi firms made the comments while in Pakistan looking for opportunities to engage in a range of industries, such as agriculture, aviation, human resources, and minerals.

Islamabad has been depending on Saudi investment to spark economic activity in the nation, which will not only boost investor confidence domestically but also aid in persuading businessmen from other countries to prioritise Pakistan, given that the country’s economy is crippled by inflation and high interest rates.

Not a shortage of proficient labourers

In his speech, Saudi Arabia’s Minister of Petroleum, Musadik Malik, emphasised the country’s recent rapid progress as well as the necessity of deepening the two countries’ already-existing bilateral relations.

He claimed that Gwadar would soon become a global transit hub and that Pakistan possessed abundant mineral riches. Malik assured the audience that Pakistan did not lack skilled labour.

It’s a narrative in progress. Details will be provided later.