ECONOMIC TIMES OF PAKISTAN
Power division issues special instructions
The Power Division has issued special instructions to all distribution companies to promote and further streamline the installation of net metering system in order to provide an opportunity to all electricity consumers to curtail their monthly electricity bills besides optimal utilisation of solar potential of the country. The instructions were issued during a meeting on the net metering system of the Central Power Purchasing Agency (CPPA). As per the latest instructions, all the distribution companies have been directed to establish a one-window facility for the electricity consumers interested in net metering. Appointment of focal persons will be ensured besides their active engagement with the targets assigned by the Power Division. Each officer at the operational level will be assigned targets of net metering, which will be properly monitored.
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SECP organizes awareness sessions
The Securities and Exchange Commission of Pakistan (SECP) has organised three awareness sessions for the securities and commodities brokers, insurance/takaful companies and non-banking finance companies in Karachi. The sessions gave awareness of the terrorist financing framework and how it differed from money laundering. The objective of the sessions was to raise awareness among financial institutions of the national risk assessment and its addendum in terms of terror financing threats and vulnerability, leading to the overall terror financing risks. In light of the results of the terror financing– national risk assessment, the financial institutions have been advised to identify gaps and improve their AML/CFT policies and develop risk mitigation strategies accordingly. SRO 245(I)/2019 requires financial institutions to file their AML/CFT annual risk assessment, compliance assessment framework and requisite data/information annually by June 30.
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Federal budget sails by NA
The National Assembly on Friday passed the federal budget with a majority vote, approving the finance bill 2019-20 to give effect to the financial proposals of the Pakistan Tehreek-e-Insaf (PTI) government. The total outlay of the budget was Rs7.022 trillion, focusing on fiscal consolidation, revenue mobilisation, austerity measures and protection to the vulnerable segments of society.
At the start of the proceedings, Minister of State for Revenue and Finance Hammad Azhar moved the motion to present the finance bill before the house for consideration and voting.
After voice voting on the motion to introduce the bill, the opposition challenged the vote and asked the Speaker for a head count. 176 members of treasury benches favoured the motion while 146 members of opposition opposed it.
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World Bank approves $722 mn loan for Pakistan
The World Bank has approved $722 million loan for Pakistan that will largely be used for improving civic and public transport facilities in Karachi– the largest metropolis that needs nearly $10 billion additional investment to make it liveable.
The World Bank was committing $652 million through three projects to strengthen institutions, municipal services and infrastructure in Karachi, according to a handout that the local office of the Washington-based lender issued on Friday. The board of directors of the World Bank approved the loan a day earlier.
The World Bank also approved another loan of $70 million for improving tourism services in Khyber-Pakhtunkhwa (K-P).
Karachi projects will focus on urban management, public transport, and safe water and sanitation to enhance Karachi’s liveability and competitiveness, said the World Bank.
The projects have been approved in light of the findings of the Karachi Transformative Strategy, which estimated that infrastructure needed $9-10 billion for the city over a period of next 10 years. This money was required to improve urban transport, water supply, sanitation and municipal solid waste treatment.
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Fitch chops growth forecast for Pakistan
Fitch Solutions, the US-based global research house, has revised down Pakistan’s economic growth forecast, believing tightening of monetary and fiscal policies under the International Monetary Fund (IMF) bailout would negatively impact GDP growth.
“We at Fitch Solutions, have revised our forecast for Pakistan’s real GDP (gross domestic product) growth for FY2018/19 (July-June) and FY19/20 to come in at 3.2percent and 2.7percent respectively, from 4.4percent and 4.0percent previously (versus the Bloomberg consensus of 3.3percent and 3.5percent),” the global research house said in a report on ‘Economic Analysis – IMF deal to weigh on Pakistan’s growth in the short run.’
“We believe that the bailout package from the IMF will see tighter monetary and fiscal policies in Pakistan, which will be negative for growth in the near term,” it said.
However, investment into the China-Pakistan Economic Corridor (CPEC) will continue to provide some support to the economy, it added.
After close to eight months of negotiations, Pakistan reached an agreement with the IMF in May for a $6 billion bailout package to address its balance of payment crisis. Following the agreement, the State Bank of Pakistan (SBP) increased the policy rate by 150bps.
Shortly after, the Ministry of Finance presented a budget in June with the aim of trimming Pakistan’s primary deficit to 0.6percent of GDP in FY19/20, from 1.9percent of GDP in FY18/19 according to the IMF’s estimates. “Given the tighter monetary and fiscal policies amid an already subdued economic growth outlook, we at Fitch Solutions have revised (down) our forecast for Pakistan’s real GDP growth,” it said.
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Money stashed by Pakistanis in Swiss Banks down 34pc
Money kept by Pakistani nationals in Swiss banks fell by over 34percent to the lowest level of CHF 724 million or $738 million in 2018.
Switzerland’s central bank, the Swiss National Bank, on Thursday published its annual report, “Banks in Switzerland 2018” and the corresponding data for its annual banking statistics.
The money that is directly linked to clients from Pakistan stood at CHF 724.1 million or $738 million in 2008, according to the annual report. It was down by CHF 376 million or 34percent when compared with CHF 1.1 billion in 2017.
However, the money held by Pakistanis through fiduciaries or wealth managers increased by 26percent to CHF 20.1 million– a net addition of only CHF 5.2 million over the preceding year.
The CHF 724 million was the lowest level of deposits retained by Pakistanis since 1996 – the year when the Swiss central bank started tracking the money by nationalities.
Pakistanis have been constantly withdrawing their funds from the Swiss banks since 2015 when Pakistan and Switzerland finalised a revised taxation treaty. Since then, there has been a reduction of 49percent or CHF 723 million in deposits held by Pakistanis, according to the annual report.
Former finance minister Ishaq Dar informed the National Assembly in 2014 that at least $200 billion of Pakistani money was stashed in Swiss banks. In a written reply, Dar had said that the government was engaging with the Swiss authorities to get to the money, hidden away by various Pakistani nationals.
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In August 2014, Pakistan initialled the revised treaty with Switzerland, which would have allowed it to get information in early 2015. But in September 2014, the then federal government decided to renegotiate the treaty despite initialling the agreement.
In May 2017, the federal cabinet finally ratified the revised bilateral treaty but it did not cover old transactions.
Prime Minister Imran Khan and his cabinet ministers, particularly Communication Minister Murad Saeed, have claimed to bring back $200 billion that Pakistanis presumably stashed in Swiss bank.
There has not been any progress on this issue during the 11-month rule of the PTI government.
Minister of State for Revenue Hammad Azhar has also claimed about receiving 152,000 banks accounts details from the Organization for Economic Cooperation and Development (OECD). But Switzerland is not among the 28 nations that have shared information about the bank accounts.
Pakistan has also shared a new Memorandum of Understanding on automatic exchange of information about the bank accounts with Switzerland. So far, there is no progress.
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After deadline, FBR to start action against tax evaders
Taxpayers will not be able to avail concessionary benefits of the Assets Declaration Scheme after the due date and following implementation of the Benami Act 2017 and it will be very difficult to hide assets not declared under the amnesty scheme.
This was the crux of the Assets Declaration Scheme conference organised by the Federal Board of Revenue (FBR) Corporate Regional Tax Office (CRTO) Lahore on Thursday. The event was aimed at capacity building of members of the Lahore Economic Journalists Association.
“The amnesty scheme presents a unique opportunity to taxpayers to reveal undeclared assets by paying minimum tax and registering themselves in the national economy,” said CRTO Chief Commissioner Muhammad Nadeem Rizvi.
“After June 30, the board may take measures to trace the black money and assets, which may be coercive and accompany heavy taxes along with penalties.”
He pointed out that the amnesty scheme could be availed even if proceedings under taxation laws were initiated, pending or finalised. Any omission or declaration could be revised within due date, however, the value of assets and tax payable would not be less than the original declaration, Rizvi said.
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Tax amnesty due date relief on the cards
Prime Minister Imran Khan on Thursday hinted at the possibility of extending the deadline of the assets declaration scheme, which is set to expire on June 30.
“Suddenly many people are expressing their willingness to come under the tax net but are complaining about the shortage of time as the scheme is about to expire,” the premier said on the state-run PTV’s special transmission.
He added that he had discussed with Federal Board of Revenue [FBR] Chairman Shabbar Zaidi and Finance Adviser Abdul Hafeez Sheikh about a strategy that would allow people to register themselves within the deadline and benefit from the scheme later.
“We will come up with a programme within the next 48 hours,” he added.
The premier said evading taxes was a culture that had its roots in the time when the British were ruling the subcontinent.
“The British treated the locals like slaves and that’s why it considered a good thing to avoid paying them taxes,” he maintained.
The premier said the government was striving to reform the institutions and change the public mindset to make the taxpayers the real VIPs and send money launderers behind bars.
He again urged the nation to avail the tax amnesty scheme to steer the country out of the debt trap.
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Ministries empowered to get approval of agreements
The federal cabinet has allowed ministries to get approval of all international agreements through the circulation of summaries instead of bringing them up for discussion, which may exclude contracts like the $6-billion International Monetary Fund (IMF) loan deal from the cabinet’s scrutiny.
International commercial contracts like the multibillion-dollar liquefied natural gas (LNG) deal that the PML-N government had signed with Qatar can now be disposed of through the circulation of summaries.
The federal cabinet took the decision in its second last meeting held under the chairmanship of Prime Minister Imran Khan on June 18, according to the Cabinet Division.
“In future, all cases involving memorandum of understanding (MoU), bilateral agreement of collaboration and international contract shall be disposed of by circulation,” said the decision notified by the federal cabinet.
Special Assistant to Prime Minister on Information Dr Firdous Ashiq Awan was not available for comments. Cabinet Secretary Maroof Afzal also did not reply to request for comments.
The federal cabinet took the decision two weeks before approval of the $6-billion loan package by the IMF. The IMF executive board is scheduled to meet on July 3 in Washington to take up Pakistan’s request for the $6-billion three-year Extended Fund Facility. Sources in the Cabinet Division said after the June 18 decision, the agreements like the IMF deal are no more required to be placed before the federal cabinet for discussion and approval. Before August 2016, the prime minister was empowered to decide on multilateral deals without notifying the federal cabinet.