Current account deficit widens 28.74pc to $1.61bn
Pakistan’s current account deficit widened 28.74% on a month-on-month basis to $1.61 billion in January 2018 compared to $1.25 billion in December 2017; suggesting the recent corrective measures the government has put in place to curb the gap have largely gone in vain.
The government of Prime Minister Shahid Khaqan Abbasi devalued the rupee by around 5% against the US dollar in December in a bid to boost exports. It also slapped additional regulatory duty on imports of over 350 items to slow down the ballooning imports. The larger objective of the measures was to control the trade deficit.
Cumulatively, in the first seven months (July 2017 to January 2018) of the current fiscal year, the current account deficit, however, is seen shrinking in ‘percentage terms’ when compared with figures of the previous six months which might be due to revised numbers.
The deficit widened 48% in the first seven months of the current fiscal year to $9.15 billion. This is, however, lower than 59% ($7.41 billion) in the first six months (July-December 2017), according to the State Bank of Pakistan (SBP).
BMA Capital Economist Fawad Khan told that the deficit may increase by an additional $100 million per month due to uptrend in international oil prices, as Pakistan remains a net oil and gas importing country.
Oil price in international markets recovered 43% to $64.5 per barrel from around $45 per barrel in June 2017.
Experts anticipated the government to further devalue the rupee against the greenback and other major currencies during the ongoing fiscal year to bring Pakistan’s rupee at par with world currencies and create some sort of balance in external trade and the overall economy.
They foresaw full fiscal year deficit at around $16 billion. This means a tough time for economic managers who will likely resort to short-term borrowing to maintain foreign exchange reserves. The central bank added that exports of goods increased 11.8% to $13.90 billion in the seven-month period compared to $12.44 billion in the same period last year.
The imports of goods surged 18% to $31.04 billion from $26.29 billion in the corresponding period last year.
The imports of goods remained on the higher side due to heavy imports of machinery and other construction material for multibillion dollar projects under the banner of the China-Pakistan Economic Corridor (CPEC).
The trade deficit (of goods and services) increased 21.43% in the seven months to $20.09 billion from $16.54 billion.
Miftah leaves for Paris to plead Pak’s case in FATF meeting
Pakistan has sent Adviser to Prime Minister on Finance Dr Miftah Ismail to plead its case at the ongoing session of the Financial Action Task Force (FATF) that is taking up a US-sponsored resolution to put Islamabad on a list of countries that financially aid terrorism.
Ismail left for Paris at the weekend to attend the FATF meetings, said officials of the Finance Ministry. The decision to send the adviser was taken abruptly.
According to the original plan, the Director General Financial Monitoring Unit, a joint secretary-level official of the Ministry of Finance and representatives from the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP) were to represent the country.
Just a day before his departure for France, the adviser had returned from a weeklong visit of Europe where he had gone to convince the FATF member countries about the actions that Islamabad has taken to remain compliant with global anti-money laundering and counter terrorism financing regime.
The FATF is holding six-day-long meetings to discuss issues ‘to protect the integrity of the global financial system and contribute to safety and security’. The meetings involve more than 700 delegates from the 203 jurisdictions of the FATF Global Network, as well as the UN, IMF, World Bank and other partners.
The plenary meetings will take place from February 21 to 23 and will focus on counter-terrorism financing and proliferation financing. The US and the UK have moved a motion to place Pakistan on the FATF terrorist-financing watchlist. France and Germany are co-sponsoring the move.
If the FATF adopts the resolution, the country can again be placed on the grey list of jurisdictions with deficient anti-money laundering regimes after a gap of three years. Pakistan suspects Indian role behind the US-sponsored resolution as Ismail recently lamented that the FATA was used for political purposes.
Auto part makers: ‘industry has lost Rs24 bn due to liberal import policy’
Pakistan’s automotive parts and accessories manufacturing industry has lost Rs24 billion due to misuse of liberal import policy of used cars in the country, former office-bearers of the concerned body claim.
“The automotive parts makers would have earned Rs24 billion against sales of their locally manufactured parts to car manufacturing industry if the country had not imported 80,000 used cars last year,” former chairman of the Pakistan Association of Automotive Parts & Accessories Manufacturers, Aamir A. Allawala, told a group of journalists.
“On average, each car being manufactured in Pakistan carries locally manufactured parts worth Rs300,000,” he elaborated.
“A leading Japanese car manufacturer in Pakistan has invested Rs2 billion in setting up a new assembly line, but it went in vain due to sudden change in the policy in the past,” he said.
NA panel recommends Rs 194bn worth of power projects
A National Assembly panel has recommended Rs193.73 billion worth of development projects in budgetary proposals for the Power Division for next financial year 2018-19, which will start in July.
The National Assembly Standing Committee on Energy met under the chairmanship of MNA Chaudhry Bilal Ahmed Virk.
Discussing implementation of its previous recommendations, the committee gave directives for framing a centralised procurement policy for the purchase of material for electricity infrastructure development schemes.
It was apprised that development schemes being carried out under the Prime Minister’s Sustainable Development Goals (SDGs) programme were facing shortage of required material, leading to delay in their completion due to lengthy procurement procedures and limited number of construction material suppliers.
The committee also took up the proposal of enhancing quota of new domestic gas connections to meet pending demand of Sui Northern Gas Pipelines Limited (SNGPL). It directed the Oil and Gas Regulatory Authority (Ogra) to step up work on the matter in order to meet public demand.
Ogra Chairperson Uzma Adil clarified that the regulator had received an SNGPL petition for increasing the quota, which was under consideration and decision would be taken within a week.
Power Division Minister Awais Ahmed Khan Leghari said 80% of schemes under the SDGs programme would be completed by the end of April. However, hurdles exist in execution of the projects, he said.
He pledged that he would inform the committee about schemes under the SDGs one and two in the next one week.
Pak needs to control population growth to become high middle-income country
Pakistan will have to reduce its current population growth rate to half in the next 30 years to achieve the status of a high middle-income country, as the current pace of increase in population is a barrier to becoming a prosperous nation, said World Bank Country Director Patchamuthu Illango.
“Pakistan will remain a low-income country even after 30 years when it turns 100, if it does not control the exploding population bomb,” said Illango while speaking at a seminar.
For the next 30 years, there are two possible pathways for Pakistan’s economy and two different futures, he added. The recent population census revealed a number of 207.7 million. If we project that to 2047, then Pakistan’s population will be 400 million people, he added.
If we project the economic growth rate of the last 70 years to next 30 years, then the GDP per capita of Pakistan could be the same as today, said Illango. Pakistan’s per capita income is $1,629, which clubs it among low-income nations.
Illango said that on the other hand, if Pakistan is able to contain its population growth rate to around 1% or below and the economy grows at a higher rate than 8%, Pakistan’s GDP per capita will be around $10,000 in 2047.
At slightly over $12,000 per capita income, a country is treated as a high income nation.
The World Bank official said that the next 10 years are critical to lay the foundation for a more prosperous economy when Pakistan turns 100 years old. This miracle can be achieved in a generation, he added.
Asian body vows support for improving skills in Pakistan
Asian Productivity Organisation (APO) Secretary General Dr Santhi Kanoktanaporn has vowed support for Pakistan in skill development for promoting innovation in productivity improvement through its technical expert services for different sectors.
“APO will promote bilateral and multilateral alliances among its 20 member countries; the private sector needs to be taken on board to run an effective productivity movement in Pakistan,” he said while talking to Federal Interior Minister Ahsan Iqbal.
Besides Iqbal, the APO secretary general, during his visit to Pakistan from February 19-21, also held meetings with Minister of State for Industries and Production Sardar Muhammad Arshad Khan Leghari, Planning Commission Deputy Chairperson Sartaj Aziz, the Federation of Pakistan Chambers of Commerce and Industry and the Islamabad Chamber of Commerce and Industry.
He suggested that Pakistan should have a strategic foresight unit to cope with future challenges like the unit that Singapore developed in 1996.
Lahore-based healthcare start-up raises $1.1mn from glowfish capital
Lahore-based online healthcare company MyDoctor.pk has announced that it has raised $1.1million in funding from an international venture capital firm. The online platform has also officially changed its name to oladoc.com.
MyDoctor.pk was founded in 2016 to make it easy for users to find doctors and specialists near them. Moreover, it allows users to book confirmed appointments with doctors and specialists instantly as a free service.
Its database features over 14,000 Pakistan Medical and Dental Council (PMDC)-verified doctors and online medicine and lab test services.
MyDoctor Co-Founder and CEO Abid Zuberi said that the brand name ‘MyDoctor.pk’ helped them connect with Pakistani users but the need to expand internationally meant they had to change the name.
In 2017, MyDoctor.pk helped over 1 million Pakistanis find doctors and specialists for their medical needs. This traction allowed the company to secure a $1.1 million investment from Glowfish Capital, a UAE-based venture capital firm with investors from Europe, Middle-East and Asia.
From tax year 2013 to 2017: FBR shows tax return statistics
In a disclosure that confirms the hollowness of tax base, the number of income tax return filers from all main sectors of the economy has contracted in the past five years and the only exception is the salaried class.
The Federal Board of Revenue (FBR) on Tuesday presented sector-wise income tax return data of the last five years to the Senate Standing Committee on Finance. The data was nothing less than an admission of failure on the part of tax officials.
This comes despite the announcement of four tax amnesty schemes and declaration by Prime Minister Shahid Khaqan Abbasi that broadening of the tax base is his foremost priority. The data covers 36 sectors including the salaried class from tax year 2013 to 2017. Excluding the categories of ‘salaried’ and ‘others’, there were more return filers in 2013 than in 2017.
Total income tax return filers stood at 1.238 million as of February 15 of the current tax year 2017 compared to 1.391 million in 2016. This shows that about 152,789 people have slipped from the FBR’s already narrow tax base. These numbers are inclusive of the salaried class.
Under the law, it is legally binding on every citizen of the country to file income tax return by September 30 every year provided he has a taxable annual income of Rs400,000 or more. However, due to its inefficiency, the FBR extends the last date till the time the total number of return filers comes close to the last year’s level.