Day: November 10, 2021

The Federal Board of Revenue (FBR) suffered a blow to its tax-to-GDP ratio in the fiscal year 2021 as the economy slowed down due to the pandemic.

FBR’s new report puts the tax-to-GDP ratio at 9.9 percent. However, the Board took timely short- and long-term decisions to mitigate the negative effects of COVID-19.

Provinces made a meager contribution of 1.0 percent only, pushing the tax-to-GDP ratio to around 11 percent in the fiscal year 2021. The tax-to-GDP is expected to grow in the fiscal year 2022 due to an improvement in revenue collection during the first half of the ongoing year.

According to the report, provincial tax-to-GDP is around 1 percent for the previous eight years.

Analysis of breakdown of tax-to-GDP ratio highlights the sales tax and direct taxes are the primary contributors, after smaller shares from custom revenues and FED.

Reasons for the low tax-to-GDP ratio can vary from country to country. However, some of the general variables that play a key role in increasing the tax-to-GDP ratio include transaction documentation, sensible economic policies, efficient taxation structure, targeted fiscal policies, automation, and effective use of IT.

Similarly, improved taxation, along with efficient expenditure management, are critical for the economic growth and stabilization of a country, according to the World Bank.

Further, in the long term, governments must rely on an effective tax system to satisfy the demands of the public sector. Another research emphasizes a significant relationship between effective governance, a thriving economy, and tax revenues, concluding that governance is important in increasing tax revenues.

Source: Pro Pakistani

The fertilizer industry sold 5.1 million metric tonnes of urea in the first ten months of 2021, up from 4.6 million metric tonnes during the same period of 2020.

In doing so, it met the rising domestic demand by selling 10 percent more urea than it had in the previous year.

The demand for fertilizers grew as the government provided urea at a discount of 83 percent under the Fertilizer Policy 2001, bringing the price of urea down by Rs. 8,500 per bag.

The Executive Director of the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC), Sher Shah Malik, said that Pakistan’s fertilizer industry is committed to maintaining an adequate supply of urea at affordable rates.

However, providing urea at a heavy discount as compared to international prices allows dealers to manipulate the markets.

“The urea industry’s MRP is currently at Rs. 1,768 per bag, but farmers are being sold urea at Rs. 2,000 per bag in various parts of the country. As a result, abnormal gains are being pocketed by dealers,” Malik explained.

Commenting on the supply of urea, Malik highlighted that there is an incorrect perception of an inadequate supply of urea in the market. The fertilizer industry sold over five million metric tonnes of urea in the first ten months of the year, which is the highest ever sales volume in a decade.

He added that the fertilizer sector can satisfy the full-year demand of 6.3 million metric tonnes of urea on the strength of better farm economics because of the continuing operation of RLNG units and acceptable inventory levels.

Source: Pro Pakistani

Traders are discontented with the government’s recent decision of setting a minimum price for the export of onions.

They claim that the government should not be involved in setting the values of goods as it will lead to their products becoming uncompetitive in the international market.

Patron-in-Chief of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association, (PFVA), Waheed Ahmed told Express Tribune that even though there has been a bumper yield of onions this year, the set exports targets cannot be met due to such barriers.

Ahmed said that the government’s rate of $400 per ton for exports is unrealistic and it is leading to a great amount of loss for the traders. He added that the excessive yield of onions this year caused their local rates to fall by Rs. 20 per kg.

The Patron-in-Chief revealed that he had written letters to the Ministries of Commerce and National Food Security and Research suggesting that the government should take advantage of the surplus crop this year, and opined that the realistic price for the export of onions is $300 per ton.

He also highlighted how the onion industry is suffering because of the shortages of reefers and containers.

There is also an excess supply of onions in the Karachi market which Ahmed expects to increase soon and lead to an excessive supply in the local market that will result in losses for the growers and traders.

Source: Pro Pakistani

There has been a heated debate on the future of oil refineries since the recent shutdown proposal from Farooq Rahmatullah, a member of the Energy Expert Group of Economic Advisory Council (EAC). In the recent proposal, Rahmatullah had suggested that Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), and Byco Petroleum Pakistan Limited should be shut down as they have become obsolete and contribute heavily to air pollution.

The top management of the refineries came into action after the proposal and comments of Farooq Rahmatullah. They made accusations that the proposal was biased and in favor of the oil-importing lobby.

A national daily reported that in the letters written to the government, the management criticized Rahmatullah, claiming that he did not have any understanding of the strategic importance of the oil refineries.

The top management of the refineries further argued that oil refineries create value-addition by saving billions of dollars, and they also provide employment directly or indirectly to thousands of people.

Zahid Mir, the Managing Director (MD) and Chief Executive Officer (CEO) of PRL, told the national daily that it would take at least 7-8 years for any green-field deep conversion refinery to produce a total of 275,000 barrels per day, which the three refineries are currently producing.

The CEO also pointed out that Farooq Rahmatullah had been the Chairman of the PRL board of directors from 2005 to 2017. However, during his tenure, he had never advocated closing down the refineries due to outdated technology.

In his defense, Farooq Ahmed revealed that the claims that he was biased towards the oil-importing lobby were false as Shell had closed 35-40 refineries in the different parts of the country.

Source: Pro Pakistani

Service Fabrics Limited (SERF) has raised its objection against the management of the Pakistan Stock Exchange (PSX) for placing its name in the defaulter’s segment.

The company considers the placement of its shares in the defaulter’s segment as unilateral and due to narrow, one-sided, rigid, and uncalled for interpretation of PSX’s regulations.

While reserving its right to initiate appropriate proceedings for the potential untold damage to the investors and the repute of the company, its sponsors, and directors, by this blindsided action; the company informs the shareholders that the above has been done without any consideration to the notices of material information having been continuously and timely shared with the market/shareholders since the start of the revival process of the company.

The company considers that these material notices would have given a clearer picture about the business affairs of the company, which, unfortunately, has not been the case, the notice issued by the company stated.

With regards to the cited regulations of PSX’s Rulebook leading to the placement of the company’s shares in the Defaulters’ segment, the company informs the shareholders as under:

According to the notice issued by the company, under the regulation 5.11.1(b), the matter of suspension of commercial production/business operations is not applicable to the company, on account of the following material progress having been achieved by the company post the balance sheet date:

The memorandum for the change of the principal line of the company’s business stands submitted to CRO, SECP, Lahore since July 09, 2021. The certified copy of the same is awaited due to the delay in the receipt of the discharge certificate from a bank, which is expected shortly.

With regards to the new business activities of the company, which had been approved by the shareholders (on May 29, 2021) and the Lahore High Court (on June 28, 2021), the company has already commenced the business operations/activities that include; Calcium Carbide Project, Super Capacitor Project and Investment in GCIL.

While under regulation 5.11.1 (i), the matter of the qualified opinion on the Going Concern or adverse opinion in the audit opinion pertains to the financial year ended June 30, 2021. The existence of the above opinion for the past period should have been analyzed from the post-balance sheet developments happening in the company.

Since then, the company had undertaken the implementation of the revival business processes, which became possible when the Lahore High Court disposed of the matter of winding-up against the Company on June 28, 2021, i.e., just two days before the close of the last financial year.

The fact that the shareholders have put their faith in the prospects of the company by subscribing to the right shares to the tune of Rs 2.3141 billion is sufficient proof that the investors disregarded the existence of any qualified opinion on the concerns or any adverse audit opinion belonging to the past period.

Hence, the placement of the company on the defaulters counter serves no purpose whatsoever when the shareholders have already overwhelmingly contributed their investments, believing in the revival plan of the company, the notice added.

The company is procuring the necessary audit certificate for satisfying the submission of the paperwork requirements of the Exchange.

Source: Pro Pakistani

The Pakistani Rupee (PKR) has posted losses against the US Dollar (USD) for the third time this week as the local unit deteriorated by Rs. 1.3 against the greenback in the interbank currency market today.

PKR has depreciated by 0.75 percent from yesterday’s (9 November) rate of Rs. 171.63 against the US Dollar, dropping to Rs. 172.93.

Following its historic losing streak against the dollar, the Rupee had recently shown signs of recovery. However, the Rupee has depreciated against the dollar by more than Rs. 2 in the past two days alone, amid rising uncertainty over the release of IMF loans to the State Bank of Pakistan. The IMF is yet to give a formal go-ahead for the facility, and pressure continues to mount against the Rupee.

Market observers expect the local currency to take more hits as long as preceding accords for financial reforms remain unsettled.

The former Treasury Head of Chase Manhattan Bank, Asad Rizvi, again highlighted the IMF deal as a root cause for the depreciating Rupee earlier today. He said, “After PM’s Saudi visit, it was expected that the loan deposit will be credited in SBP a/c & simultaneously the stalled IMF loan program will resume.”

He added, “Despite tough measures & reforms, the delay is causing unrest. [The] market is nervous & Y’day [yesterday] #PKR lost 112 paisa[s].”

Business conglomerate, Arif Habib Limited, commented on the Rupee’s desperate run against the rampant dollar by summarizing that the PKR has depreciated 11.94 percent against the USD since its recent peak on 14 May.

The PKR also continued its disappointing performance against other major currencies for the third consecutive day and posted losses in the interbank currency market today.

It posted losses of Rs. 1.31 against the Canadian Dollar (CAD), Rs. 1.34 against the Pound Sterling (GBP), 12 paisas against the Australian Dollar (AUD), and Rs. 1.18 against the Euro (EUR).

It also posted a loss of 35 paisas against the UAE Dirham (AED) and 34 paisas against the Saudi Riyal (SAR) in today’s interbank currency market.

Source: Pro Pakistani