- Pakistan is seeking financial assistance from Saudi Arabia, Qatar and UAE, says Miftah Ismail.
- Saudi Arabia, hopefully, will reload [deposit money in Pakistan’s central bank] before December, he says.
- Pakistan is also finalising a bailout package with the International Monetary Fund (IMF).
Pakistan is seeking financial assistance from Saudi Arabia, Qatar, and the United Arab Emirates (UAE) to stabilise the economy and is hopeful for a positive result, revealed Finance Minister Miftah Ismail.
Speaking on Geo News programme Jirga, the finance minister announced that Pakistan had reached out to Saudi Arabia, Qatar and UAE to help the cash-strapped country.
“Saudi Arabia, hopefully, will reload [deposit money in Pakistan’s central bank] before December,” the minister told Jirga’s host, “Also, the Kingdom may extend Pakistan’s limit to buy oil on credit.”
The government has also sought support from Qatar, the minister said. “We are talking to Qatar to let us buy Liquefied natural gas (LNG) on loan. We are also talking to the UAE [for financial assistance],” he added.
Separately, Ismail explained that $2.4 billion loan will be received from China in two or three days, as all the formalities related to the loan have been completed after a recent visit by Foreign Minister Bilawal Bhutto Zardari.
Pakistan is also finalising a bailout package with the International Monetary Fund (IMF), prior to which the government hiked up the price of petrol and removed subsidies put in place by the previous government, as demanded by the international lending body.
“If we did not make these decisions [with the IMF] it would have been difficult for Pakistan,” Ismail said on the show, “I am being honest here. We had to save Pakistan from defaulting.” He added that a further increase in petrol prices cannot be ruled out as it was a “moving target”, meaning it depended on the price of petrol in the international market.
Under a new agreement with the IMF, the price of electricity could also be boosted, revealed the minister.
“In March [former prime minister] Imran Khan reduced the price of electricity by Rs.5 per unit,” Miftah Ismail explained, “That will have to be removed at some point.”
On rolling power outages in the country this summer, the minister said Pakistan has a power generation capacity of 28,000 MW, excluding the capacity of the Karachi Electric, while the demand for electricity is close to 19,000 MW.
Through repair work at power plants, and providing fuel to the plants, the capacity would be increased, he added. “Before Eid, the capacity will be increased to 36,000 MW,” he said, which would reduce load shedding in the country.
Bulls Reenter PSX: The KSE-100 Rises More Than 886 Points
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Pakistan’s steel prices are rising; get the latest figures here
Another increase in steel prices has resulted in higher construction expenses in Pakistan. The economic downturn and continuous shipping delays have resulted in sharp price increases for building supplies, which has an effect on those who are planning to construct homes.
Due to increased manufacturing costs and supply chain interruptions brought on by the Middle East crisis, the price of iron, commonly known as steel rebar, has increased by Rs5,000 per ton. Local and imported steel rebar now costs between Rs240,000 and Rs260,000 per ton as a result of this most recent rise.
The cost of branded iron went from Rs255,000 to Rs260,000 per ton, while the cost of local iron climbed from Rs236,000 to Rs240,000. Furthermore, the cost of scrap or unprocessed iron has increased to Rs160,000 per ton inin the iron and steel markets.
The impact of the skyrocketing steel prices will be exacerbated by any more interruptions in the raw material supply chain. The cost of cement, on the other hand, has somewhat decreased and is at Rs 1,246 per bag.
Up 30% to Rs 5.1 trillion by mid-February, FBR collected
The total increase in domestic taxes has been around 40%, whilst import duties and associated levies increased by 16% between July 2023 and January 2024.
With the recovery of the GDP and increased inspection of FBR collection, the growth in revenues accelerated.
Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Nevertheless, decreases in import tariffs over time and, more recently, import license limits implemented by the State Bank of Pakistan (SBP) to manage the country’s balance of payments in the aftermath of foreign exchange shortages, were mostly responsible for the decline in the rise of import taxes.
However, the impact of improvements in import valuation, which resulted in collections of Rs 151 billion, as well as the anti-smuggling campaign, which saw a surge of about 69% in the current fiscal year over the previous one, are also included in the income collected from imports.
The statement said that there was room to improve anti-smuggling operations by considering expanding Baluchistan’s customs force, which now only has 378 anti-smuggling employees out of 20,000 total.
The mobilization of domestic tax income, which accounted for more than 64% of all revenues received in the current fiscal year, was hailed in the statement as a welcome change.
In parallel, the percentage of import duties has decreased to 36% from over 50% just three years prior. The main drivers of this increase in revenue were the several taxes sources. From Rs. 1,751 billion to Rs. 2,447 billion, income tax receipts increased significantly—by 40%.
Banks, the petroleum and oil lubricants (POL) business, the textile industry, the electricity sector, the food industry, and a number of service industries were among the major income tax payers. Up to mid-February, FBR receipts increased by 30% to Rs. 5.1 trillion. Notable rise was also seen in sales tax receipts, which increased by 19% from Rs. 1,480 billion to Rs. 1,766 billion.
POL, the electricity sector, the food sector, the automobile sector, the iron and steel sector, and the chemical sector were important growth drivers.
The amount collected in federal excise taxes increased significantly by 61%, from Rs. 190 billion to Rs. 307 billion.
Taxes on tobacco goods, the cement industry, drinks, airlines, fertilizers, and the automobile sector were the main causes of this increase. The amount collected in customs duties increased by 14%, from Rs. 552 billion to Rs. 629 billion.
The POL, automobile, iron and steel, electronics, and food industries were among the main donors to customs duties.
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