ECONOMIC TIMES OF PAKISTAN
FBR recovers just $6mn from OECD treasure trove
Despite high priority of Prime Minister Imran Khan, the government could dispose of just 19 cases and recovered a paltry sum of Rs883 million ($6 million) out of total 57,450 cases worth $7.5 billion referred by the Organisation for Economic Cooperation and Development (OECD).
The Federal Board of Revenue (FBR) on Thursday gave a detailed briefing to the National Assembly Standing Committee on Finance about the recovery status and actions taken in offshore cases, referred to it by the OECD.
Pakistan had received the information from OECD in September last year – a month after the PTI came into power – but the agreement had been signed during the tenure of the Pakistan Muslim League-Nawaz (PML-N) government.
Former finance minister Asad Umar presided over the standing committee meeting who directed the FBR to also present the results of the Panama leaks and Dubai properties cases in the next meeting.
The extremely poor show appeared to be the outcome of raw nature of OECD information, lack of concerted efforts by the FBR and delay in empowering the offshore commissioners of the FBR who had been given powers just two weeks ago. A Rs1.64-billion demand had been raised against 19 persons and these cases were disposed of by recovering Rs883 million, Mohammad Ashfaq, Director General of Directorate of International Taxes of the FBR, informed the standing committee on Thursday.
In September last year, the OECD had shared information about over 152,000 bank accounts owned by Pakistani nationals with the tax authorities. The OECD information was exclusive of UAE. The FBR chairman said that Pakistanis who hold UAE Iqama are treated as UAE nationals and the UAE government has not provided information about them.
PKR strengthens against $
The rupee strengthened against the dollar at Rs157.8/158.3 in the inter-bank market on Thursday compared with Wednesday’s close of Rs158.5/159, according to forex.pk. Earlier, the SBP let the rupee depreciate massively in the inter-bank market after finalising an agreement with the International Monetary Fund (IMF) for a loan programme on May 12. The IMF has asked Pakistan to end state control of the rupee and let the currency move freely to find its equilibrium against the US dollar and other major world currencies.
FX exchange: SBP reserves fall 0.49pc to $7.73bn
The foreign exchange reserves held by the central bank decreased 0.49percent on a weekly basis, according to data released by the State Bank of Pakistan (SBP) on Thursday.
Earlier, the reserves had spiralled downwards, falling below the $7-billion mark, which raised concern over Pakistan’s ability to meet its financing requirements. However, financial assistance from the United Arab Emirates (UAE), Saudi Arabia and other friendly nations helped shore up the foreign exchange reserves.
On August 2, the foreign currency reserves held by the SBP were recorded at $7,729.1 million, down $37.9 million, compared with $7,767 million in the previous week. The decrease in reserves was due to external debt servicing and other official payments, the statement added.
Overall, liquid foreign currency reserves, held by the country, including net reserves held by banks other than the SBP, stood at $15,020.2 million. Net reserves held by banks amounted to $7,291.1 million.
Pakistan received the first loan tranche from the International Monetary Fund (IMF) of $991.4 million on July 9, which helped bolster the reserves.
Previously, the reserves had jumped on account of $2.5 billion in inflows from China.
NA seeks action against wheat, sugar barons
The National Assembly panel on Thursday directed the government to take action against wheat flour mills and sugar barons after the anti-trust watchdog suspected that 10percent to 26percent increase in prices of both the commodities was the result of cartelisation.
The National Assembly Standing Committee on Finance stepped in after the Economic Coordination Committee (ECC) of the Cabinet failed to take corrective measures to check “unjustified” increase in the prices of wheat flour and sugar.
The ECC that again met on Thursday took a lenient approach towards constant rise in prices of both the commodities. The report presented in the ECC on the wheat situation was contrary to what the Competition Commission of Pakistan (CCP) told the standing committee the same day.
The Pakistan Bureau of Statistics on July 25, 2019 had reported the local price of wheat and wheat flour at the level of Rs362.6 and Rs 422.2 per 10kg, respectively, showing a decrease of 0.03percent for wheat and 0.69percent for wheat flour, as compared to the price level during the second week of July 2019, an official handout issued by the Ministry of Finance after the ECC meeting stated.
The CCP gave a briefing on the price trend in wheat flour and sugar to the NA Standing Committee on Finance, which was chaired by former finance minister Asad Umar.
FBR waives CNIC condition for traders by 2-month
The Federal Board of Revenue (FBR) on Thursday delayed enforcement of Computerized National Identity Card (CNIC) condition on purchase of over Rs50,000 for nearly two months for traders, thwarting a nationwide strike that they were set to observe against the government.
The interim understanding was reached during a meeting between the FBR and various associations of traders with FBR Chairman Shabbar Zaidi in chair.
“It has inter alia been agreed with consensus that no adverse action under the Income Tax Ordinance 2001 and Sales Tax Act 1990 will be taken against the traders merely on the basis of information emanating from providing CNIC as required under the Finance Act 2019 till September 30, 2019”, according to a press release issued by the FBR after the meeting.
It added there will be discussions between the associations and bodies of traders for the finalization of scheme for small shopkeepers for which drafts have been furnished by various trade bodies, which will be taken into consideration by the FBR.
Through budget 2019-20, the government made it legally binding for the industrialists to seek the CNIC from the wholesalers and distributors on sales of over Rs50,000. The move pitched the traders and small shopkeepers against the government.
US asks Pak to extend FATF scope to economy
The United States has urged Pakistan to expand Financial Action Task Force (FATF) safeguards to informal sectors of economy amid its concerns over slow progress on implementation of 27-point Financial Action Plan.
The US delegation that is in the town for an on-ground assessment of implementation on the 27-point Action Plan of the FATF met on Wednesday with Federal Minister Hammad Azhar who is also a coordinator on FATF affairs from the civilian side.
During their interaction with private and public sectors, which began on Monday in Karachi, the US authorities were getting first-hand information about the country’s preparedness to deliver on the FATF Action Plan and the actual improvement in the Anti-Money Laundering (AML) and Combating Financing of Terrorism (CFT) regime.
Azhar has recently been appointed as coordinator of a cabinet body that is overseeing implementation on the FATF Action Plan. This is in addition to the National Executive Committee on AML that is headed by Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh.
The sources said that the US delegation discussed the loopholes in the financial system and its lack of coverage of various sectors of the economy.
They said that the US authorities were of the view that about one-fourth transactions were still taking place outside the formal banking sector.
They advised to take measures that could fully capture the business transactions in the real estate and the agriculture sectors, the sources said.
The delegation held discussions about the implementation status of the 27-point Action Plan. Two days ago, the US Treasury officials also met with the private sector in Karachi aimed at getting their feedback about improvements in Pakistan’s financial system.
Sources told that during meeting with the government officials, the US delegation acknowledged the work done by Pakistan during past 15 months but expressed concerns over slow progress that would result in the missing of many of the agreed action points.
PM approached to halt NAB action against businessmen
Adviser to Prime Minister on Commerce Abdul Razak Dawood has said that he has approached Prime Minister Imran Khan to seek his advice on stopping the National Accountability Bureau (NAB) from taking action against the business community.
Responding to a question about NAB’s action against Hussain Dawood of the Engro Group, which runs a liquefied natural gas (LNG) terminal, the adviser said he had taken up the issue with the premier.
“I have discussed it with the prime minister, it is not a good thing, NAB is not for every businessman, we have to stop it,” remarked Dawood while speaking at a press conference on Wednesday. However, he did not disclose the PM’s response but called it a matter of concern.
Replying to a question about escalating tensions with India, the adviser said Pakistan was analysing the situation along the Line of Control to know the exact position.
“Trade is going on with India and we will not take decision in haste about suspending bilateral trade.”
Turning to exports, the PM aide said Pakistan’s exports rose 14.23percent (or $233 million) to $1.87 billion in July 2019 compared to $1.63 billion in the same month of previous year. Interestingly, imports fell 18.39percent (or $884 million) to $3.9 billion against $4.8 billion in July 2018. “Our trade gap is going in the right direction, however, this month’s [August] performance will give us a real trend,” he said.
Dawood pointed out that economists were of the view that currency depreciation always had an impact after a lag of six to eight months.
“There will be no more devaluation of the rupee against the dollar,” he emphasised.
Among export products, according to the adviser, rice exports increased 71percent year-on-year in July 2019, readymade garments 17percent, plastic and plastic goods 34percent, chemicals 26percent, mangoes 33percent and footwear 24percent.
Replying to another question, he said businessmen thought they should not cooperate with the government in documentation of the economy but the “government will not move back and they must register themselves.” He pointed out that big businesses were ready to support documentation but small shopkeepers were resisting it.
Debt commission probes energy plants’ privatisation
The Debt Inquiry Commission has prodded the government over its plan to privatise two liquefied natural gas (LNG)-fired power plants that the authorities want to sell to raise funds for budget financing.
The commission, in a meeting held last week, questioned the Ministry of Privatisation and the Ministry of Energy over the closure of Pakistan Steel Mills (PSM) and the decision to privatise LNG-fired power plants, said sources in the Ministry of Finance.
Haveli Bahadur Shah and Balloki power plants, which were based on LNG, were set up during the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government in a bid to end load-shedding in Punjab as soon as possible.
One of the questions that the commission asked was about the fate of electricity supply at the time of war, sources said.
The commission’s demand for details of LNG power plants appeared to be surprising as no foreign or domestic loans had been taken for their construction. Questions have not been raised in the past about any kind of wrongdoing in these power plants.
The commission did not inform the Ministry of Energy and Ministry of Privatisation about the motive of investigating the planned privatisation transactions, the sources said.
Government-controlled National Power Parks Management Company Limited (NPPMCL) owns the Haveli Bahadur Shah and Balloki power plants, which have combined production capacity of 2,453 megawatts.
The Pakistan Tehreek-e-Insaf (PTI) government had decided to privatise both these plants aimed at raising over a billion dollars.