Day: June 15, 2023

A delegation representing the All Pakistan Mobile Phone Traders Association led by General Secretary Munir Baig Mirza visited Pakistan Telecommunication Authority (PTA) Headquarters today.

The delegation met with PTA Chairman Major General (R) Hafeez Ur Rehman and discussed matters concerning the business interests of mobile phone traders, particularly concerning mobile devices, applicable FBR duties, and the subsequent impact on the traders. The chairman assured the delegation of the PTA’s cooperation to pursue their business interests.

The delegation expressed their gratitude to the PTA chairman for his receptive approach and the assurance of the PTA’s support.

Source: Pro Pakistani

Efforts to digitize the land revenue records of Rawalpindi district have faced multiple setbacks over the past three years, with numerous missed deadlines and changes in leadership.

The digital “girdawari,” a process to inspect rural areas and gather land and crop records, is crucial for accurate land documentation and to combat land encroachments.

An official from the district administration revealed that the province had initiated the process of digital “girdawari” for the first time. They claimed to have computerized over 10 million property document mutations, which contain records of land transfers. However, due to changes in the Patwari system, the “girdawari” had not been conducted in recent years, despite the requirement of biannual inspections according to the land revenue act.

During the “girdawari,” land revenue officials assess the status of rural land, the presence of tube wells, the types of crops being cultivated, and whether the land is being used for commercial purposes. The absence of digital records has posed challenges for people, particularly concerning the transfer of inherited land.

Despite five different commissioners setting eight deadlines over the past three years, the task of completing the revenue record of Rawalpindi remains unfinished. The sluggish progress and failure to meet deadlines have cast doubts on the completion of the digital “girdawari” by the latest given deadline of June 30, as set by Divisional Commissioner Liaquat Ali Chattha.

Furthermore, while efforts were made to improve revenue matters in Rawalpindi tehsil by dividing it into three revenue tehsils, the presence of only one tehsildar overseeing the revenue matters has undermined the intended purpose of the division.

Comparatively, Rawalpindi tehsil lags behind other tehsils in terms of land record completion. Out of a total of 321,334 land unit allocations known as “khasras,” work on 310,810 (96 percent) has been completed in Rawalpindi tehsil, while Taxila, Gujar Khan, and Kalar Syedan have achieved 99 percent completion.

In response to the delays, the commissioner appointed a special team to finalize the incomplete revenue records and instructed deputy commissioners to suspend patwaris whose land records remained unfinished. However, it appears that the deputy commissioners did not act on these instructions.

On a positive note, Commissioner Rawalpindi Division Liaquat Ali Chattha has recently directed all assistant commissioners to oversee the work on the digital “girdawari” and ensure its completion by June 30. This directive highlights the urgency of the task and emphasizes its prioritization.

Source: Pro Pakistani

Finance Minister Ishaq Dar Thursday said that amendments to the State Bank Act were ‘intolerable’.

While speaking during the meeting of the Senate Committee on Finance and Revenue, the minister said that amendments to the State Bank are not complete yet. The finance minister quipped that the State Bank of Pakistan (SBP) is Pakistan’s bank and not of some other country.

It is pertinent to mention here that the finance minister has mentioned the amendments to the State Bank Act numerous times in recent weeks. From Dar’s remarks, it is obvious that he believes that the independence given to the central bank as a result of these amendments has had a negative impact.

After assuming the charge as the finance minister last year, Dar termed the linkage between fiscal and monetary policies “imperative” for economic growth.

As part of a broader plan to give the central bank complete autonomy, the International Monetary Fund (IMF) had pushed amendments to the SBP Act of 1956 in January last year as a pre-condition to reviving the bailout programme.

In a brief issued in 2021, the central bank said that the amendments being proposed are in line with international best practices and also take into account the ground realities in Pakistan. It highlighted that overall, the amendments balance the provision of necessary operational and financial autonomy to the State Bank with new mechanisms for enhancing transparency and strengthening accountability.

Source: Pro Pakistani

Federal Minister for Economic Affairs Sardar Ayaz Sadiq has said that domestic industry and employment generation suffers while Pakistan’s dependency on foreign goods ultimately increases due to smuggling and this has been creating a never-ending vicious cycle.

Addressing the briefing session by IPSOS for parliamentarians regarding tax evasion in five sectors of Pakistan, Sadiq said that it is alarming to see huge tax evasion in five sectors, predominantly led by tax evasion in real estate and tobacco.

Estimates reveal that the total annualized tax potential of the tobacco industry in FY24 would be more than Rs. 500 billion but more than 50 percent of this is stolen by a very powerful illicit tobacco sector, he added.

The minister said that the decline in large-scale manufacturing has also been corroborated by the Pakistan Bureau of Statistics and will have a detrimental long-term impact on legitimate industry sustainability, employment, and exports. Real estate is an important sector but has its own disadvantages and we need to control the mushroom growth of housing societies on agricultural land.

The economy will start improving and we will be seen as a business-friendly nation once we work towards driving a level playing field for fair market competition. Tax harmonization is important for business growth, he further stated.

Adviser to the Prime Minister on Kashmir and Gilgit-Baltistan Affairs Qamar Zaman Kaira said that Pakistan is losing out Rs. 1 trillion in tax evasion every year and it can avoid foreign support if tax leakages are controlled through stringent enforcement of laws and bringing the black economy in tax net.

Kaira further mentioned that the highest tax evasion is in only two sectors, namely real estate, and tobacco, close to Rs. 750 billion. Illegal trade is not only a threat to legitimate businesses in the country, but also to the sovereignty of our country and the employment and livelihoods of our people.

Tax Evasion breakdown

IPSOS CEO Abdul Sattar Babar briefed the parliamentarians regarding the latest study on tax evasion in five sectors including real estate, tobacco, tyres and auto lubricants, pharmaceuticals, and tea has reached Rs. 956 billion. Estimated tax evasion in the real estate sector is Rs. 500 billion annually while the tax evasion in the tobacco sector is close to Rs. 240 billion.

Loss due to tax evasion in tyres and auto lubricants contributes Rs. 106 billion and pharma industry tax losses stand at Rs. 65 billion annually while Rs. 45 billion annual tax loss is recorded in the tea sector.

IPSOS report suggests that if tax evasion can be controlled then Pakistan can cover the total cost of the Public Sector Development Program (PSDP). This huge amount is also enough to fully finance Benazir Income Support Program (BISP). The report also indicates that by collecting this huge amount of tax by curbing evasion through stringent enforcement, Pakistan can enhance the federal education budget by 10 times.

Source: Pro Pakistani

The budget presented by Pakistan’s federal government lacks major revenue-raising or spending-containment measures to alleviate intense government liquidity pressures, says Moody’s Investor Services (Moody’s).

The Rating Agency stated that given a lack of new significant revenue-raising measures, the government’s revenue projections rely mainly on the assumption that nominal GDP growth will be high and support an increase in revenue. In the current context, we see significant downside risks to that assumption. Pakistan’s very weak debt affordability drives high debt sustainability risks.

On 9 June, the government presented its budget to Parliament. The consolidated (federal and provinces) budget was projected at Rs. 19.5 trillion. The budget deficit is estimated at 6.5 percent of GDP, narrowing from an estimated deficit of 7.0 percent in fiscal 2023.

Real GDP growth is projected at 3.5 percent for fiscal 2024, up from 0.3 percent in fiscal 2023, and headline inflation at 21 percent versus 29 percent in fiscal 2023.

Moody’s considers the deficit estimates and growth projections to be optimistic, given the stresses the economy is facing, in particular government liquidity and external vulnerability pressures, exacerbated by the severe floods of August 2022, that will continue to weigh on economic activity over fiscal 2024.

At the same time, the budget does not contain significant revenue-raising or spending-containment measures. The budget provides a wide range of relief measures for households and businesses. A large share of the increase in expenditure goes towards salaries and pensions for government employees.

Total employee-related expenses are budgeted at Rs1.2 trillion, compared with the estimated spending of Rs. 960 billion in fiscal 2023. In addition, the government earmarked Rs. 2.8 trillion for grants and subsidies in fiscal 2024, compared with an estimated Rs. 2 trillion in fiscal 2023.

However, Pakistan’s low revenue/GDP (stable at around 12 percent from 2019-22) is a major constraint on the government’s debt affordability and debt burden. The budget targets fiscal 2024 tax revenue at Rs.v9.2 trillion, up 28 percent from an estimated Rs. 7.2 trillion in fiscal 2023.

About 60 percent of the fiscal 2024 budget (Rs. 11.7 trillion) goes towards servicing interest and principal payments on the government’s debt. Having a significant share of its budget going towards debt payments will constrain the government’s capacity to service its debt while meeting the population’s essential social spending and infrastructure needs. Pakistan’s government liquidity and external positions remain fragile. The budget projects Rs. 6.35 trillion ($21 billion) of loans from external sources, including $1.5 billion from Eurobond issuances, $4.6 billion from commercial banks, $2.4 billion from the IMF, and another $2.7 billion from other multilateral partners. The government expects most of the remaining sums to come from other bilateral partners, including China, Saudi Arabia, and the United Arab Emirates.

Pakistan is unlikely to access market financing at affordable costs, either from Eurobonds or commercial banks, in the foreseeable future. In fiscal 2023, the government issued no Eurobonds and raised only Rs. 521 billion from commercial banks, far short of the Rs. 1.4 trillion it targeted in the fiscal 2023 budget. The country’s external debt repayment will remain high for the next few years, with about $25 billion of repayments (principal and interest) due in fiscal 2024.

Meanwhile, foreign exchange reserves are very low at $3.9 billion as of 2 June. However, Pakistan’s external funding prospects for fiscal 2024 and later are highly uncertain.

Moody’s further added that it is not guaranteed that Pakistan will be able to secure $2.4 billion from the IMF as budgeted. Whether Pakistan will join another IMF programme may only become clear after elections, which are due by October 2023. Negotiations for any future IMF programme would also take some time, even if they succeed. Until a new programme is agreed upon, Pakistan’s ability to secure loans from other bilateral and multilateral partners will be severely constrained.

While quoting media reports, Moody’s stated that Finance Minister Ishaq Dar said at the post-budget press conference that the government is looking at rescheduling bilateral debts, but it does not plan to approach the Paris Club or multilateral partners to reschedule their debt.

However, the central bank governor, Jameel Ahmed, was subsequently reported as saying that there was no plan for Pakistan to enter into any debt restructuring at a briefing following its monetary policy decision on 12 June 2023.

“Under our definition, a suspension of debt service obligations only to official creditors is unlikely to have direct rating implications. Indeed, such relief would increase the government’s available fiscal resources for essential health, social, and infrastructure spending. Our sovereign issuer rating reflects the probability of default and financial loss experienced by private creditors. Should private-sector creditors be affected, it would likely entail a default event on private-sector debt and would be captured in our ratings,” it added.

Source: Pro Pakistani

Prime Minister Muhammad Shehbaz Sharif, who is on a two-day official visit to Azerbaijan, visited the mausoleum of the national leader of Azerbaijan, Heydar Aliyev in Baku on Thursday.

The Prime Minister paid glowing tribute to the services of the Azri national leader and laid floral wreath on the mausoleum.

Source: Radio Pakistan