Day: April 24, 2024

The country borrowed just $6.899 billion from multiple financing sources during the first nine months (July-March) of the current fiscal year 2023-24 compared to $7.764 billion borrowed during the same period of 2022-23, representing 39 percent of the annual budget target

Borrowing options were evidently scarce due to unfavorable credit ratings and challenging conditions in the global financial markets despite support provided by the International Monetary Fund (IMF).

According to the Economic Affairs Division (EAD) data, the country received $218.53 million in March 2024 compared to $358.71 million in March 2023.

There is no mention of the $1 billion disbursed by the UAE. If the IMF and the UAE inflows are added, the total inflows could reach $9.799 billion during the first nine months of the current fiscal year.

The government has budgeted $2.4 billion from the International Monetary Fund (IMF) for the current fiscal year 2023-24 and received $1.9 billion of the $3 billion Stand-By Arrangement (SBA), h
owever, the EAD data does not reflect it.

The $6.899 billion included $2 billion received from Saudi Arabia under the head of time deposit during July 2023. The data further showed that the government had budgeted estimates of $4.5 billion from the foreign commercial banks for the current fiscal year 2023-24, however, no money was received under this head during the first nine months of the current fiscal year.

The government had budgeted $1.5 billion for the issuance of bonds, however, the country has yet to issue the bonds, hence no amount has been received so far.

The government had budgeted $17.619 billion from multiple financing sources for the current fiscal year including $17.384 billion in loans and $234.60 million in grants.

The country received $781.48 million under the head of the ‘Naya Pakistan Certificate’ during the first nine months of the current fiscal year 2023-24.

The country received $2.738 billion from multilaterals and $870.22 million from bilateral during July-March 2023-24. The no
n-project aid was $4.724 billion including $3.580 billion for budgetary support and project aid was $2.174 billion.

China disbursed $508.34 million under the head guarantee for the JF-17 B project funded by China National Aero-technology Import and Export Corporation (CATIC). China further disbursed 67.39 million in July-March against the government budget of $18.54 million for the current fiscal year.

The Asian Development Bank (ADB) disbursed $665.52 million during the period under review compared to the budgeted $2.086 billion for the fiscal year 2023-24.

Saudi Arabia disbursed $595.18 million against the budgeted $600 million under the head of oil facility during July-March 2023-24. Saudi Arabia disbursed another $62.03 million in the current fiscal year so far.

The USA disbursed $36.01 million in the first nine months against the budgeted $21.60 million for the fiscal year. Korea disbursed $24.81 million and France $39.89 million during the current fiscal year.

The IDA disbursed $1.292 million in Ju
ly-March against the budgeted $1.489 billion for the current fiscal year and IBRD $163.15 million against the budgeted $840.36 million. The IsDB (Short-term) disbursed $200 million in July-March against the budgeted $500 million for the current fiscal year and AIIB disbursed $300.04 million, while IFAD disbursed $26.29 million against the budgeted $42.68 million for the current fiscal year.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) will disallow input tax adjustment of 1,680 Tier-1 retailers in case they fail to integrate with the FBR’s computerized system for real-time reporting of sales till May 31, 2024.

A Sales Tax General Order No. 01 of 2024 issued on Wednesday revealed that the Finance Act, 2019 added sub-section (6) to section 8B of the Sales Tax Act, 1990 (‘the STA, 1990’) which provided that input tax of a Tier-1 Retailer ‘(T-1R)’ who did not integrate its retail outlet in the manner prescribed under subsection (9A) of section 3 of the STA, 1990 during a tax period, would be reduced by 15 percent.

The figure of 15 percent was subsequently raised to 60 percent vide the Finance Act, 2021.

In order to streamline the process of registration and integration of Tier-1 retailers, FBR has issued S.R.O 1842(I)/2023, dated 21st December 2023, whereby retailers, whose deductible withholding tax under section 236H of the Income Tax Ordinance, 2001 during immediate preceding twelve consecutive months
has exceeded Rs 100,000 have been prescribed as Tier-1 retailers under clause (g) of section 2(43A) of the Sales Tax Act, 1990.

Such retailers are liable to be registered and integrated with the Board’s computerized system for real-time reporting of sales under the Sales Tax Act, 1990 and rules made thereunder.

The FBR has issued a new STGO for the integration of such retailers who fulfill the conditions laid down in section 2(43A)(g).

In order to operationalize this important provision of law, a system-based approach has been adopted whereby all T-1Rs who are liable to integrate but have not yet integrated, w.e.f. June-2024 (Sales Tax Returns filed in July 2024) are to be dealt with as per the procedure.

A list of 1,680 identified T-IRs, enclosed with this STGO has also been placed on FBR’s web portal at www.fbr.gov.pk allowing them to integrate with the FBR’s POS System by 31st May 2024.

In case a notified T-1R claims that it is not a T-1R as per the definition provided in Section 2(43A) of the Sales T
ax Act 1990, and therefore not liable to integrate, it shall apply to the Commissioner concerned for exclusion from the list, and the Commissioner would decide in this regard in accordance with the procedure laid down in STGO 17 of 2022, dated 13.05.2022.

Upon filing of Sales Tax Return for June 2024 for all hereby notified T-1Rs not having yet integrated, their input tax claim would be disallowed as above, without any further notice or proceedings, creating tax demand by the same amount, FBR added.

Source: Pro Pakistani

The Directorate of Customs Intelligence, Karachi has detected a fraudulent import of artificial leather worth Rs. 220 million.

According to information obtained by ProPakistani, the Directorate of Customs Intelligence, Karachi through Director General Faiz Ahmad Chadhar received credible information that the Clearing Agency M/s Ayyaz Enterprises was involved in imports of artificial leather without payment of duty and taxes in the name of fake companies including M/s Awami Textile, M/s Fraz Enterprises and M/s Pak Asia for manufacture of goods for exports but was fraudulently selling it illegally.

The investigation carried out by the Directorate of Customs Intelligence, Karachi revealed that Awami Textile, Fraz Enterprises, and Pak Asia having addresses in different parts of the country did not physically exist and that the artificial leather imported without duties and taxes for manufacture of goods for export on their names was illegally sold in the market.

These companies were fake, only existed in doc
uments, and had been created for evasion of massive duties and taxes through misuse of the Exports Facilitation Scheme introduced by the government for the promotion of exports.

Ayyaz Enterprises have so far imported artificial leather worth Rs. 220 million in the name of these fake companies by evading duties and taxes of Rs. 110 million and fraudulently sold it in the market.

One of the shipments of artificial leather valuing Rs. 16 million involving duty and taxes of Rs. 0.86 million imported by Ayyaz Enterprises in the name of fake company Awami Textile has also been seized at KICT West Wharf, Karachi port by the Directorate of Customs Intelligence, Karachi which has lodged FIR against the Clearing Agent as well as the fake companies on whose name huge quantity of artificial leather was imported without payment of duties and taxes and has initiated further investigations.

The Directorate of Customs Intelligence, Karachi is of the view that this timely cognizance of the misuse of the Export Facilitation
scheme introduced by the government for bonafide exporters will help in preventing its misuse by unscrupulous elements in the future.

Source: Pro Pakistani

The Pakistan Stock Exchange (PSX) rose to a new all-time high on Wednesday, surpassing its previous high of 71,500 seen on Tuesday.

After opening trade at 71,359 points, the benchmark KSE-100 index went up by 1.48 percent or 1,055 points at 10:35 AM to a new high of 72,414.

It closed at 72,051, up 0.97 percent or 692 points.

The KMI 30 index gained 1,486 points settling at 121,162, while the KSE All share index increased by 306 points to close at 47,172.

Top Volumes

The highest participation was witnessed in Pakistan International Bulk Terminal (PSX: PIBTL) with over 54.5 million shares traded, followed by K-Electric Limited (PSX: KEL) and Air Link Communication Limited (PSX: AIRLINK). The scrips had 40.1 million shares and 25.9 million shares traded, respectively.

SCRIP PRICE HIGH LOW CHANGE VOLUME

PIBTL 7.02 7.07 6.79 0.38 54,513,000

KEL 4.16 4.23 4.1 0.09 40,123,957

AIRLINK 78.39 78.39 72.5 5.42 25,939,673

WTL 1.34 1.36 1.32 0.02 24,114,567

TELE 9.14 9.27 8.9 0.15 17,620,891

UNITY 24.53 24.55
23.61 0.6 16,685,503

PRL 27.74 28.25 27.4 -0.48 16,645,816

Source: Pro Pakistani

Pakistan and Iran have agreed to expeditiously finalize the Free Trade Agreement (FTA), a joint statement said on Wednesday as Iranian President Dr. Seyed Ebrahim Raisi concluded his three-day official visit to Pakistan.

According to the joint statement, with a view to further strengthening bilateral economic cooperation, both sides agreed to expeditiously finalize the Free Trade Agreement (FTA) and hold the next sessions of Annual Bilateral Political Consultations (BPC) and Joint Business Trade Committee (JBTC) as well as the 22nd round of the negotiations of the Joint Economic Commission (JEC) in the near future.

The statement said that the two countries also agreed to facilitate regular exchange of economic and technical experts, as well as delegations from Chambers of Commerce from both countries to intensify economic cooperation. The declaration of ‘Reemdan border point’ as an international border crossing point under TIR and opening of the remaining two border sustenance markets was also agreed.

Bot
h sides agreed to enhance mutual interaction through regular exchange of high-level visits to strengthen fraternal relations, the statement added.

Further, the two sides agreed to further expand trade and economic cooperation and affirmed their commitment to transform their common border from ‘border of peace’ to a ‘border of prosperity’ through joint development-oriented economic projects, including setting up of joint border markets, economic free zones, and new border openings.

They also reiterated the importance of cooperation in the energy domain, including trade in electricity, power transmission lines and IP Gas Pipeline Project. The two leaders agreed to boost their bilateral trade to $10 billion over the next five years.

Both sides underscored the imperative of a long-term durable economic partnership and collaborative regional economic and connectivity model, particularly for socio-economic development in Iran’s Sistan-Balochistan Province and Pakistan’s Balochistan Province, the statement added.

The joint statement said that there was consensus to fully operationalize barter trade mechanisms between the two sides to facilitate economic and commercial activity, particularly under ongoing collaborative endeavours, such as border sustenance markets, which would contribute towards improvement of the economic situation of local residents, and further constitute a step towards enhancing border security.

Pakistan and Iran stressed the importance of harnessing their respective geographic locations for promoting connectivity between the two countries as well as with the broader region. The two sides noted with satisfaction the progress made in the regular shipment of goods under the TIR Convention and agreed to fully operationalize the Convention to further promote efficient, speedy and barrier-free trade between Pakistan and Iran. It was agreed that full operationalization of the TIR Convention would also enhance regional integration and connectivity across the wider ECO region, the statement said.

It adde
d that as members of Belt and Road Initiative (BRI) and Economic Cooperation Organization (ECO), the two countries expressed firm resolve to enhancing cooperation in connectivity, infrastructure development and energy sectors. The two countries also agreed to expand mutually beneficial and enduring linkages between the sister ports of Gwadar and Chahbahar.

It is pertinent to mention here that, at the invitation of the Prime Minister Shehbaz Sharif, the Iranian President paid an official visit to Pakistan from 22-24 April 2024. The president o was accompanied by a high-level delegation comprising the Foreign Minister of Iran as well as other members of the cabinet and senior officials.

Source: Pro Pakistani

Experts at a high-level policy forum on Wednesday demanded of the International Monetary Fund (IMF) and other global finance lending institutions to ensure relief for growth in Pakistan keeping in view the plight of common masses and the prevailing economic conditions of the country.

The forum titled: ‘Prosperity for Pakistan: Reforms for National Economic Growth’ was organized by Sustainable Development Policy Institute (SDPI) in collaboration with the United Nations Development Programme (UNDP) and the World Bank (WB).

In his opening remarks, Dr Samuel Rizk, the Resident Representative of UNDP Pakistan, said it is an important high-level dialogue that focuses on Pakistan’s economic trajectory. ‘Pakistan needs to focus on marco-economic stability, debt recovery, and improved revenue generation for its prosperity,’ he said, adding that the country has largely faced the impact of global macro-economic fallout, COVID-19 pandemic and Ukraine-Russia war.

Dr Rizk further said that the country’s economic fault
lines are turning risk into threat whereas the sustainable economic policy initiatives require cooperation from stakeholders and international community to achieve economic revival and improvement.

Dr Shamshad Akhtar, the former caretaker finance minister, said the country needs to undergo massive transformation for economic sustainability as it demanded inclusivity and climate resilience as the key components of prosperity agenda. She added that macro-economic stability has to be ensured through adequate process and reinforced with great commitment through significant revenue enhancement along with focus on remote earnings to be aligned with increase in its earning agenda.

She underlined that the country had to abandon domestic and external debts with improved taxation footprint and productivity improvements to achieve the goal of economic growth.

Dr Abid Qaiyum Suleri, the SDPI Executive Director, said the recommendations presented by the experts are identical to the domestic agenda for economic betterme
nt of the country. He recommended that the country needs to fix the leakages in its economic system, the chronic menaces like state-owned enterprises that are damaging the national economy.

‘It is not possible for the country to avert default like situation amid more economic compromises towards non-tax paying sectors,’ he added. Moreover, Dr Suleri said, it is also necessary to advocate on IMF to review impacts of its recommendations on people of Pakistan during its quarterly review and while making an assessment of how it is impacting the life of common masses.

Kanni Wignaraja, the UN Assistant Secretary-General and UNDP Regional Director for Asia and the Pacific, said the green economy is not a luxury but a living reality in the prevailing times, whereas many Asian countries have transformed their transport sector that indicated low subsidy on fuels and increased incentive for eco-friendly means.

‘It’s not the issue of behaviour change but the issue of access to technology to improve governance. For exa
mple, she said, universal access to Wi-Fi is imperative to ensure economic justice with infrastructure development whereas dignity is critical in human development landscape.’

Wignaraja said tax subsidy equation in developing countries show direct correlation with more burdening of the already taxed and less inclusion of the untaxed sectors. ‘Pakistan’s debts go more in consumption than to increase productivity. However, we have to carry our own narrative and issues as Pakistan has to make its news choices to overcome economic crisis. It has been dragging its debt for decades and should explore new opportunities and take its affairs and decisions into its own hands,’ she added.

Pakistan should not import the things which are burdening the debt consumption she said, adding that the country needs a viable and single source of finance to address its economic woes.

Tobias Akhtar Haque, Lead Country Economist and Acting Country Director, WB-Pakistan said Pakistan needs to reduce budgetary deficit to lessen debt
s and utilize resources for human and infrastructure development.

He added that it is crucial for Pakistan to have a balanced budget to create fiscal space for growth and economic recovery. ‘However, it is necessary to review fiscal exemptions and those with political motives should be closed to start taxing the untaxed sectors like real estate and large agricultural farmland owners,’ he maintained.

Haque said the subsidies provided to the energy, fertilizer and gas-based industries needs to be abolished to ensure efficient movement of economy and stop benefitting wrong people and support social development initiatives like Benazir Income Support Programme (BISP).

In his closing remarks, Dr Abid Suleri extended the vote of thanks to UNDP and SDPI teams and the participants for making the session vibrant and interactive. He said two myths to be broken that Pakistan is among the least emitters as there are around 100 more countries in this category and its ranking is 20th in terms of low Greenhouse Gas (GHG)
emissions. In terms of climate finance, Pakistan needs to explore private climate finances through evidence-based approach and proper homework, he concluded.

Source: Pro Pakistani

The National Electric Power Regulatory Authority (NEPRA) has given decision on the utility’s Transmission and Distribution Investment Plan till FY2030 which will catalyze the company’s efforts to reduce losses in transmission and distribution, drive growth in its customer base, and bolster the power utility’s infrastructure to meet current demands and future needs, KE said in a statement on Wednesday.

Investment in power utility infrastructure is essential to ensure a smooth, stable, safe, and uninterrupted supply of electricity to a growing number of customers. Since privatization, investment of Rs. 544 billion has enabled KE to double its customer base, double the power consumption of this customer base, and more than halve its TandD losses, KE said.

It said that the plan was submitted in accordance with regulatory guidelines and a hearing was held in March 2023 where KE management apprised stakeholders regarding the projects being planned from FY2024 to FY2030. For this period, KE has clearly identified
priorities and projects for investment areas such as growth, energy loss reduction, network rehabilitation, maintenance, and safety.

Digitization is also a central area of focus in these operational areas. The investment plan outlines projects to install more AMRs and implement technology such as Advanced Distribution Management Systems and Meter Data Management Systems to strengthen internal processes and introduce more transparency as well, it added.

On the transmission front, the plan envisages the addition of grids and transmission lines which will further strengthen the reliability of KE’s network and enable the offtake of additional power from the National Grid, the company said.

Commenting on the occasion, CEO KE Moonis Alvi stated, ‘Over the next 7 years, we are looking to invest $2 billion in Transmission and Distribution to manage the city’s needs through targeted investments and tech-based interventions. I’d like to acknowledge the efforts of all stakeholders who have been a part of this journey
and who will continue to work with us to modernize our infrastructure and prepare us for the future.’

The investment plan complements the company’s Power Acquisition Program through which KE has outlined its vision to achieve 30% share of renewable energy in its generation mix by 2030. In this regard the company has also received regulatory approval on RFPs of 640MW renewable projects which is another critical link in the mission to enable access to affordable energy for all.

Our teams at K-Electric are reviewing NEPRA’s decision in detail and will remain engaged with NEPRA, and as we move forward, a sustainable and cost reflective tariff remains critical for timely execution of the investment plan, the statement added.

Source: Pro Pakistani

The government has requested the World Bank for restructuring of Higher Education Development in Pakistan (HEDP) project of worth $400 million for third time to allow for the completion of critical IT and IT-related activities and the full achievement of Performance Based Condition (PBCs).

Official documents revealed that the project is in its fifth year of implementation and its objective is to support research excellence in strategic sectors of the economy, improve teaching and learning and strengthen governance, in the higher education sector.

The government requested an extension with the revised closing date of June 30, 2025. This extension will help HEC achieve a strengthened digital learning infrastructure contributing to a more resilient higher education system in Pakistan.

The overall project implementation progress is rated moderately satisfactory. Of the 13 intermediate results indicators, 02 have already been met, 09 are likely to be met, and 02 are unlikely to be met. The project has made imp
lementation significant progress. The disbursement from IDA Credit as of February 29, 2024, is $278.30 million, including $258.19 million against PBCs and $20 million for the Investment Project Financing (IPF) component.

Despite the overall reasonable implementation progress, the IT-related procurements under Component 3 had been taking longer than anticipated because of: (i) delayed hiring of IT staff and initiation of IT-related activities, (ii) approvals and completion cycle of several procurements taking longer than anticipated and, (iii) need for revision of the procurement strategy to address capacity challenges of the local IT market. Procurements valuing $50.5 million are under implementation or have been advertised, and another $14.5 million are in the pipeline.

The restructuring also entails changes in four PBCs, whereby (a) PBC 1 Year 4 (iii) target to be shifted to year 6 due to the delay in the completion of the Sustainable Development Goal (SDG) dashboard; (b) PBC 1 year 5 (iii) target to be d
ropped as development of the portal and allied procurement took longer than anticipated; (c) PBC 11 year 3 (i) target to be shifted to Year 5 as the draft Open and Distance Learning Policy (ODLP) is expected to be approved by February 2024, and subsequently implemented; (d) revise the wording of PBC 5 to apply to both Affiliated Colleges and Affiliating Universities, including retroactive revision of the target for PBC 5 year 3 (iii) and; (e) PBC 11 year 5 (i) target to be shifted to year 6 as with the ODLP approved in year 5, HEC will implement the framework for one year and will hold stakeholder consultations for feedback collection. The dropped PBC 1 Year 5 (iii) target and PBC 11 Year 4 target do not constitute a risk to achieving the PDO.

The project has been restructured twice. The first restructuring was approved on June 14, 2021, to respond to the COVID-19 pandemic impacts and involved: (a) introduction of Component 6 to support continued learning for all in case of unpredicted crises and university
lockdowns and provision of special funds to universities to increase their financial autonomy, (b) reallocation of funds between Components to better address ongoing needs, and (c) revision of the Results Framework to reflect the changes in activities.

The second project restructuring was approved on June 15, 2023, to repurpose the unutilized funds from lapsed targets under PBC 1 and PBC 2 toward: (i) a new round of Rapid Technology Transfer Grants (RTTGs) focused on topics related to emergency response, climate change, extreme weather event preparedness and import replacement research (PBC 1, Component 1); (ii) a new target to track RTTG outcomes (PBC 2, Component 1); and (iii) an increased target for universities participating in the framework for improvement in financial autonomy (PBC 10, Component 6).

Source: Pro Pakistani