Category: Industry

With a view to facilitating the public, the federal government upon recommendation of the State Bank of Pakistan (SBP) has extended the last date for exchanging old banknotes of Rs. 10, 50, 100, and 1000 by one year to December 31, 2022.

Previously, the last date for the exchange of old notes was December 31, 2021. As per the federal government’s Gazette Notification dated December 23, 2021, upon expiry of the period, the old design banknotes will stand canceled, and will not be exchangeable.

It is emphasized here that this is the final extension in the date of exchange of these banknotes granted by the federal government, and the public is advised to avail this opportunity and exchange their old design banknotes through the SBP Banking Services Corporation (BSC) Offices till December 31, 2022.

It is noteworthy to point out that having currency notes demonetized six years ago, the central bank has changed its mind about canceling them.

The vintage Rs. 500 banknotes were the last of the central bank’s historic series to have been dropped from circulation as the new currency notes were being pushed for immediate use. Historically, the country’s third-largest currency note was initially positioned for de-circulation on September 30, 2011, and this deadline was later extended to October 1, 2012.

Source: Pro Pakistani

The Ministry of Finance stated on Friday that the amendments proposed to the State Bank of Pakistan (Amendment) Bill were in line with the international best practices and aligned to the ground realities in Pakistan.

In a detailed clarification about the controversial bill, the Ministry said the National Accountability Bureau (NAB) and the Federal Investigation Agency (FIA) would have full jurisdiction to investigate the State Bank of Pakistan (SBP) officials in criminal and corruption-related matters.

It added that indemnity was being proposed for actions taken in good faith so that where due care and due process were followed, officials were not afraid to take action. Similarly, all major policy decisions of SBP would continue to be made by the Board of Directors or the Monetary Policy Committee (MPC), constituted by the federal government. In fact, it maintained, additional checks and balances on the management of SBP were being added under the proposed amendments.

Addressing the concerns about the central bank becoming “a state within the state”, the Ministry clarified that SBP would continue to be a public institution that is owned by the government and works for Pakistan only and to deliver the best outcomes for Pakistani citizens within the mandate given to it by the government.

It further said that key officials of the SBP will continue to be appointed by the federal government, as is the current practice.

It further said that SBP will no longer focus on growth but only inflation. It added that focusing on price stability as the primary objective is sensible since inflation is one of the variables that the central bank can influence directly through its tools.

Addressing the concern that curbing central bank lending to the government will create hardships for the people, the clarification said that borrowing from the central bank has also contributed to a lack of fiscal discipline, low revenue generation in the form of one of the lowest tax-to-GDP ratios in the world, repeated booms and busts and the need for repeated assistance of International Monetary Fund (IMF).

It said that government borrowing from the central bank is equivalent to printing money that leads to inflation which in turn causes the currency to depreciate and an increase in the current account deficit.

It added that to curb these harmful tendencies, most countries have included legal provisions to limit government borrowing from the central bank. In most advanced countries, half of emerging markets, and around one-fifth of developing countries, central banks cannot finance the fiscal deficit.

“In light of Pakistan’s history, a similar restriction [on borrowing from the central bank] would be beneficial, by leading to lower inflation, greater fiscal discipline, increased efforts to raise the tax-to-GDP ratio, and less balance of payments crises in the future,” it said.

Addressing the concern that the bill will lead to policies that undermine those of the government, the ministry said “a new mechanism for coordination is being proposed between the Finance Minister and the Governor [State Bank], under which they would establish a close liaison through a mutual agreement and keep each other informed of matters that jointly concern the Ministry of Finance and the State Bank.”

Quashing the accusations that the bill is an international conspiracy, it clarified that this is not the first time the State Bank Act is being amended. Major revisions were previously made using a similar process in 1994, 1997, 2012, and 2015. The current proposed amendments are a continuation of that practice to modernize the central bank in light of domestic realities, best international practices, and international experience.

The finance ministry also rejected the impression that the priority of the central bank will be repayment of external debt, to the detriment of the domestic economy and resources for development.

Opposition lawmakers had likened the bill, coupled with the Finance (Supplementary) Bill 2021, akin to surrendering the economic sovereignty of the country. Approval of both the bills is necessary to ensure Pakistan’s sixth review of the $6 billion Extended Fund Facility (EFF) is cleared by the IMF’s Executive Board, scheduled to meet on January 12.

Source: Pro Pakistani

The Senate Standing Committee on Finance, Revenue, and Economic Affairs has approved the proposal of the Federal Board of Revenue (FBR) with regard to the withdrawal of corporate guarantee for importers introduced through tax amendment ordinance on September 15, 2021.

The committee meeting was held under the chairmanship of Senator Talha Mahmood to finalize and make recommendations about the Finance (Supplementary) Bill, 2021.

Chairman FBR, Dr. Muhammad Ashfaq Ahmed, informed the committee that the tax department had also proposed withdrawal of the corporate guarantee conditions which had been incorporated in the last budget. Earlier, FBR took the bank guarantee from importers for provisionally allowing the goods. FBR had added the corporate guarantee conditions on the request of some sectors but there had been no benefit, he added.

Senator Farooq H Naek commented that it was also a good proposal, however, the insurance guarantee conditions should be added for the importers.

Senator Saleem Mandviwala asked FBR as to why it was not adding cheque conditions in this procedure.

The Chairman FBR said the tax body had dozens of cheques of FATA/PATA people. “We cannot do anything on this apart from the corporate guarantee conditions, as industries took the stay from the court and state revenue remained stuck up,” he explained.

Senator Musaddiq Malik asked the FBR to tell how many guarantees the business community had submitted to FBR. To this, the Chairman FBR said, “we do not [have any] data yet, but [it] can be provided in two weeks.”

The committee recommended adding insurance guarantee conditions in this regime also.

The Chairman FBR also informed the committee that FBR had also proposed to withdraw the valuation powers from collectors. “We will give powers to directors posted at Quetta and Peshawar for solving the valuation-related issues,” he said.

He maintained that FBR had given powers to collectors for determination the values of items imported from Afghanistan and Iran but there were certain issues so we have the purpose to give these powers to directors instead of collectors. There was a conflict of interest as collectors not only determining the values but assessing also, he added.

Senator Farooq H Naek said that this was a good suggestion as collectors had nothing to do with a valuation if a specific department existed.

Senator Saleem ur Rehman questioned what was the past practice of determining values as associations had also approached the Senators on this matter.

The Chairman FBR replied that collectors were determining the values but now directors would make valuations. Basically, there was an administrative issue and we now going to solve this, he remarked.

The Chamber of Commerce of Quetta and Chaman also requested not only to post director adjudication but also director valuation to solve the valuation issues. A top official said, “I have personally visited Balochistan and solved the problems of the business community by posting the director adjudication and valuation in KP and Balochistan.”

The committee approved the proposal of FBR with regard to the withdrawal of powers of collectors in the determination of imported items values.

Source: Pro Pakistani

A 22-member delegation of Omani businessmen, led by Chairman Oman Chamber of Commerce and Industry Redha Juma Mohamed Ali Al Saleh, and comprising Pakistani businessmen in Oman, called on Prime Minister Imran Khan on Thursday. After 20 years, this is the first time an Omani business delegation is on a visit to Pakistan to explore business and investment opportunities.

The delegation observed that the business-friendly policies of the current government created great opportunities for investors in tourism development, fisheries sector, warehousing, and storage facility development in port cities, and the development projects in Gwadar.

The delegation also showed keen interest in the investment opportunities in ferry service connecting Oman, coastal cities of Pakistan, CPEC [China-Pakistan Economic Cooridor] projects, especially industrialization of Gwadar, agriculture sector, and a proposed corridor comprising land and sea routes between Oman and Pakistan to connect the Middle East, Central Asia, Africa, and South East Asia with Pakistan at its pivot.

The contribution of the Pakistani diaspora during the COVID pandemic and the assistance provided by the Kingdom of Oman in the release of Pakistani prisoners in Oman were also highlighted in the meeting.

The two sides agreed to enhance cooperation in the areas of common interest while taking steps to improve mutual trade.

Prime Minister Imran Khan directed the government entities concerned to take the steps required for increased cooperation in the areas of trade and investment between Oman and Pakistan.

Federal Ministers Shaukat Fiaz Tarin, Makhdoom Khusto Bakhtiyar, Advisor to Prime Minister Abdul Razzaq Dawood, Special Assistant to Prime Minister on CPEC Khalid Mansoor, Chairman Board of Investment Azfar Ahsan, and officials concerned attended the meeting.

Source: Pro Pakistani

Discussing the Finance Supplementary Bill 2021 for the second consecutive day, the Senate Standing Committee on Finance recommended on Thursday withdrawal of the proposed 17 percent general sales tax (GST) on gold jewelry and also opposed the proposal to impose the same on milk formula.

The Senate panel meeting was held with Senator Talha Mahmood in the chair. Annoyed at the absence of Minister for Finance Shaukat Tarin, the committee members said they should reject the bill. The members and the Federal Board of Revenue (FBR) officials expressed their views, observations, and reservations on the proposals made under the bill.

Representatives of the Pakistan Jewelers Association told the committee that up to 180 tons of gold jewelry were traded in the country every year. The committee was informed that almost 80 tons of gold was smuggled into the country. The committee recommended taking back the proposed 17 percent GST on gold jewelry.

FBR officials informed the committee that out of 36,000 jewelers in the country, only 54 were on the active taxpayer’s list. They further apprised the committee of the stringent regulations on the import of gold and said that the regulations had led to its smuggling. The committee members expressed serious reservations over such a large number of unregistered jewelers.

Senator Farooq Hamid Naek said 137 out of 1000 infants in Pakistan passed away due to lack of proper nutrition and said they won’t let the government impose a tax on formula milk.

FBR officials said the use of formula milk had become a fashion and it was available in the market in the price range of Rs. 600/kg to Rs. 1400/kg. They pointed out that formula milk would be available at subsidized rates if bought on a doctor’s prescription.

FBR officials also informed that Track & Trace System to cover tobacco manufacturing would soon be extended for sugar, fertilizer, cement and beverages industry, and petroleum products.

Earlier in the meeting, the Drug Regulatory Authority of Pakistan (DRAP) representative informed the meeting that the prices of registered drugs would not increase despite the new GST regime. However, the committee was informed that prices of drugs of nutritional value would increase due to the 17 percent sales tax.

The meeting was attended by the Leader of the House in the Senate, Senators Dr Shezad Waseem, Zeeshan Khanzada, Farooq Hamid Naek, Saleem Mandviwalla, Sherry Rehman, Mohsin Aziz, Kamil Ali Agha, Musadik Malik, Dilawar Khan, Anwaar-ul-Haq Kakar, Faisal Subzwari and Faisal Saleem Rehman. Chairman Federal Board of Revenue (FBR), member FBR and senior officials of the attached departments also attended the meeting.

Source: Pro Pakistani

The Pakistani Rupee (PKR) once again posted losses against the US Dollar (USD) in the interbank market today. It depreciated by 18 paisas against the greenback after hitting an intra-day low of Rs. 177.07 against the latter during today’s open market session.

It depreciated by 0.10 percent against the USD and closed at Rs. 176.92 today after halting movement and closing at 176.74 in the interbank market on Wednesday, 5 January.

The rupee reported losses against the USD less than 24 hours after the State Bank of Pakistan (SBP) amended the foreign exchange regulations and directed exporters to bring in foreign income proceeds within a maximum period of 120 days from the date of shipment.

The new measure was initially expected to positively impact foreign exchange inflows in the market but anything of the sort is yet to be successfully corroborated with in-progress financial indicators.

It should be noted that the federal government’s debt had swelled to an all-time high of Rs. 40.99 trillion during the first five months of the current fiscal year mainly due to the depreciation of the local currency and the State Bank of Pakistan’s (SBP) loan to the government against the allocation of Special Drawing Rights (SDRs).

In light of the PKR’s interbank performance during the trading hours earlier today, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, tweeted, “SBP through its circular has asked exporters to bring proceeds within 120 days VS 180 days previously. Narrowing of [the] number of days will initially speed up the pace of inflow, but won’t increase the receivables sizeably unless exports pick up. Hence, [the] impact will be thin”.

Conversely, the PKR reversed most of its losses against other major currencies in the interbank currency market today. It posted gains of seven paisas against the Euro (EUR), 49 paisas against the Pound Sterling (GBP), 74 paisas against the Canadian Dollar (CAD), and Rs. 1.28 against the Australian Dollar (AUD).

On the contrary, it lost four paisas against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.

Source: Pro Pakistani