ECONOMIC TIMES OF PAKISTAN
Cabinet shoots down ‘sin tax’ proposal
The federal cabinet on Thursday rejected a proposal to impose Sin Tax on consumption of tobacco and beverages due to legal and administrative hitches in enforcement of the levy. The Ministry of National Health Services tabled the draft bill, seeking permission to impose Rs10 federal health levy on a 20-stick cigarettes pack and Re1 on 250 milliliter sugar sweetened beverage. The federal health levy has been originally called a “Sin Tax”. The cabinet approved an eleven-member board of Sarmaya-e-Pakistan Limited (SPL) company that has been setup to reform dozens of loss making state-owned enterprises by separating them from their parent ministries. The Federal Minister for Information Fawad Chaudhry told that the federal cabinet did not approve health levy. He said the cabinet also approved board of the SPL Limited. The Ministry of National Health Services had proposed the Sin Tax to “finance health insurance scheme and fatal diseases programme” of Prime Minister Imran Khan. But Finance Minister Asad Umar took the stance that it was not appropriate for any other ministry to make taxation proposals, according to participants of the meeting. Under the Rules of Business, it is the job of the Revenue Division to propose tax measures.
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Foreign exchange: SBP reserves dip 2pc to stand at $8.04bn
The foreign exchange reserves held by the central bank decreased 1.98percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday. Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan’s ability to meet its financing requirements. However, the financial assistance from the United Arab Emirates (UAE) and Saudi Arabia helped shore up the foreign exchange reserves. China and the UAE have agreed to provide more cushion for the fast depleting reserves. On February 15, the foreign currency reserves held by the SBP were recorded at $8,043 million, down $163 million compared with $8,205.9 million in the previous week. The decline was attributed to external debt servicing and other official payments. Overall, the liquid foreign currency reserves, held by the country, including net reserves held by banks other than the SBP, stood at $14,794.6 million. Net reserves held by banks amounted to $6,751.6 million.
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Existing gaps narrowed: IMF negotiations nearing conclusion, says Asad
Finance Minister Asad Umar on Thursday said negotiations with the International Monetary Fund (IMF) were still ongoing but nearing conclusion. “We are still holding discussions with the IMF. Talks are now being held on a regular basis. There were two technical sessions last week in which progress was made on various fronts,” the minister said during an informal interaction with journalists after an event in Islamabad. Umar acknowledged that differences still existed between the two negotiating parties but said he was hopeful they would be resolved. “Increased and regular interaction allowed for better communication and greater exchange of data. This has helped us narrow the existing gaps,” said the minister. To a query regarding the next visit by an IMF mission, Umar said it would likely take place at a later stage. “We will now invite a regular IMF mission when the negotiations are all but done,” he told reporters. The minister also spoke on the Financial Action Task Force’s (FATF) recent review of Pakistan’s performance on compliance with global guidelines against terror financing and money laundering.
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Differences persist over alters at FBR’S top level
As the shortfall in tax revenues could widen well beyond Rs230 billion by the end of current month, a disagreement persists at the top political level over making administrative changes in the Federal Board of Revenue (FBR). Prime Minister Imran Khan is not willing to change FBR Chairman Jehanzeb Khan at this stage, according to government sources. Contrary to this, Finance Minister Asad Umar and Minister of State for Revenue Hammad Azhar had a different view about the chairman, they added. Although during closed-door meetings PM Imran expressed annoyance over the FBR’s poor performance, he gave the FBR chairman a pat on the back on Wednesday during the top taxpayers’ certificates distribution ceremony. Acknowledging the need for reforms, the prime minister said the FBR chairman was working on reforming the tax authority. Before the PM’s speech, Umar publicly expressed his frustration with the FBR.
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Pak’s big middle class attractive market for french firms
France wants to enhance trade with Pakistan as it is a potential market for trade and investment, said France Ambassador to Pakistan Dr Marc Baréty. Speaking to business community at the Islamabad Chamber of Commerce and Industry (ICCI), the ambassador pointed out that the 80 million-strong middle class of Pakistan was an attractive market for French companies due to which they were taking more interest in the South Asian nation. He said the current volume of bilateral trade did not reflect the true potential of both countries and it could be further enhanced through strong efforts by both sides. The envoy said Pakistan and France were doing trade in limited goods and both should focus on the diversification of trade to achieve better results. He also pointed out that the EU’s GSP Plus facility for Pakistan had enabled it to bolster exports by 60percent to countries of the largest economic bloc.
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Current account deficit contracts 48pc in Jan over Dec
Pakistan’s current account deficit – the difference between government’s foreign expenditures and revenues – dropped a massive 48 percent in January 2019 with much-needed support from a notable increase in exports. The deficit fell by half to $809 million in January compared to $1.54 billion in the previous month of December 2018, the State Bank of Pakistan (SBP) reported on Thursday. The decline, which came largely in line with expectations, has eased the pressure on the country’s dwindling foreign currency reserves and has improved its import payment and debt repayment capacity.
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Finance division refuses to waive PKR 139mn guarantee fee for Wapda loan
The Finance Division and the Economic Affairs Division (EAD) have refused to back a proposal for waiving the guarantee fee of Rs139 million on a loan taken by the Water and Power Development Authority (Wapda) during the tenure of Pervez Musharraf’s government to meet financial obligations of power distribution companies. Wapda took a loan of $125 million from Standard Chartered Bank in June 2007 with government guarantee. The loan was partially paid in two installments of $25 million each in 2009. The remaining around $70 million was converted into local currency in 2010, which came in at Rs6.45 billion. That portion of the loan, as part of the Rs216-billion circular debt, was to be transferred to a holding company, but the government could not do so, as Standard Chartered argued that the agreement was not acceptable to its syndicate members.
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Budget deficit hits six-year high at PKR 1.03tr
The budget deficit hit a six-year high at Rs1.03 trillion, or 2.7percent of the total size of national economy, in first half of the current fiscal year due to a double-digit growth in defence and debt spending, and negligible improvement in revenues. The budget deficit in the first half of FY19, when the Pakistan Tehreek-e-Insaf (PTI) came to power, was worse than the deficits recorded in the July-December period of previous years, when Pakistan Muslim League-Nawaz and the Pakistan Peoples Party were in power. Debt and defence spending consumed Rs1.36 trillion or 61.2percent of the total federal expenditure, according to the Ministry of Finance. The development spending stood at just Rs183 billion or 8.4 percent of the total federal spending.
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Power tariff rises PKR 1.8 on fuel cost adjustment
The National Electric Power Regulatory Authority (Nepra) has approved an increase of Rs1.80 per unit in the tariff for all power distribution companies for January 2019 following electricity production with the help of expensive fuel. The tariff was revised upwards on account of fuel cost adjustment as the cost of fuel went up while consumers got electricity at lower tariffs. Power distribution companies will include the tariff hike of Rs1.80 per unit in next month’s electricity bills and will collect an additional Rs13.5 billion from the consumers. The tariff adjustment will, however, not be applicable to the lifeline consumers, who consume up to 50 units a month, and K-Electric consumers. At a public hearing on Wednesday of a petition filed by the Central Power Purchasing Agency (CPPA) on behalf of the distribution companies, Nepra was informed that liquefied natural gas (LNG) and coal-based power plants were not operated in January, which burdened power consumers with an additional cost of Rs6.7 billion.
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True vips are those who pay taxes: PM
Prime Minister Imran Khan on Wednesday gave appreciation certificates to the top nine taxpayers of the country, and ironically some of the recipients in the individual category face inquiries in the National Accountability Bureau (NAB) and also allegedly own offshore companies. In yet another surprise, none of the known big names were among the top three taxpayers of Pakistan in the individual category. Mrs Saima Shahbaz Malik and her father-in-law Muhammad Yasin Malik were Pakistan’s top two taxpayers respectively. Yasin Malik received the appreciation award on behalf of his daughter as well, as she was out of the country.