Home / In The News / Pakistan In Focus

Pakistan In Focus

Inflation hits highest in 4 and 1/2 years

The inflation reading spiked 7.2percent in January, hitting the highest level in nearly four and a half years in the wake of increase in prices of utilities, medicines and an expansionary fiscal policy, reported the Pakistan Bureau of Statistics (PBS) on Friday. The cost of every notable consumer item including medicines, beef, house rent, gold and cars increased significantly last month, affecting all types of income groups of consumers. Prices are hurting consumers at a time when the economy is slowing down and many professional groups in the salaried class are facing job cuts. The latest inflation bulletin has endorsed the central bank’s apprehension about persistent inflationary pressures, which have now led to the reversal of the two-month-old downslide in the inflation index. The headline inflation raced to 7.2percent in January 2019 compared to 6.2percent in the preceding month, reported the national data collecting agency. It was the highest level since August 2014, when the headline inflation stood at 7percent. Core inflation accelerated from 8.4percent to 8.7percent in January – the highest level since June 2014.

FBR rises property valuation by average 20pc

In a major development, the government on Friday further increased property valuation rates by an average of about 20percent for 21 major cities of the country with immediate effect aimed at largely plugging a loophole that is pumping black money into the economy. The increase under the second phase of bringing the property valuation rates closer to market values had been due since July 2017. The last Pakistan Muslim League-Nawaz (PML-N) government had twice postponed the increase, fearing backlash ahead of 2018 general elections. The move is expected to generate an additional Rs5 billion in tax revenues in remaining five months of the current fiscal year, but it will disappoint real estate agents and traders. The Federal Board of Revenue (FBR) on Friday night notified the new property valuation rates. It also added more areas to the existing cities aimed at broadening the coverage.

“The rates have been increased by 20percent on an average,” Dr Hamid Ateeq Sarwar, the FBR spokesman, told. He said overall the property valuation rates had been increased in the range of 15percent to 25percent. After the fresh increase, the property valuation rates were now closer to 60percent of the actual market values, said Sarwar, who is also Inland Revenue Policy member of the FBR.

SECP seeks ways to protect stock investors

The Securities and Exchange Policy Board of the Securities and Exchange Commission of Pakistan (SECP), following recommendations of its regulation committee, has referred proposed amendments to different laws to the Ministry of Finance for approval. The policy board, which met at the SECP head office under the chairmanship of Khalid Mirza, discussed the progress made by the SECP in relation to the decisions taken to facilitate the stock market, ensure ease of doing business and reduce fee across the board. SECP Chairman Farrukh Sabzwari, who was inducted into the policy board recently, vowed to get the work done at a rapid pace. In the meeting, Pakistan Business Council CEO Ehsan Malik gave a presentation, pointing out various anomalies and difficulties in the Companies Act 2017. These include Section 452, which deals with the global register of beneficial ownership of shareholding in foreign companies, Section 208, which is related to party transactions, as well as other provisions.

Business confidence in Pakistan drops sharply

The overall business confidence in Pakistan plunged to -12percent in a survey carried out in December 2018, compared to the reading of +14percent recorded in the previous survey held in May last year. The Business Confidence Index (BCI) Survey Wave 17, carried out by the Overseas Investors Chamber of Commerce and Industry (OICCI) in December 2018, was largely influenced by a downward trend in the services sector and partially in the retail and wholesale trade sector. The Business Confidence Score (BCS) in the services sector, which represented about 30percent of the respondents, was -29percent compared to +23percent in the previous wave. The BCS of retail and wholesale trade, representing 30percent of the respondents, declined to -5percent compared to +6percent in the earlier wave. In the manufacturing sector, which represented over 40percent of the survey respondents, the BCS stood at -4percent, a fall of 19 percentage points compared to the Wave 16. Commenting on the BCI survey results, OICCI President Irfan Wahab Khan said “the negative business confidence in the current wave was largely anticipated.”

Textile industry gets PKR 29bn relief in duties, taxes

The Pakistan Tehreek-e-Insaf (PTI) government has given another bailout package worth Rs29 billion to the textile tycoons by waiving taxes and duties on the import of cotton– a vital input in textile manufacturing.

The PTI government, like the previous Pakistan Muslim League-Nawaz administration, is offering support to the industrial barons, who have got billions of rupees worth of incentive packages. They are now receiving gas and electricity at discounted tariffs. The government has also recently approved a Rs25-billion gas subsidy for five zero-rated export-focused industries where textile giants are the major beneficiaries.

“The government has come up with another support package for the textile manufacturers by waiving 50percent of the outstanding gas infrastructure development cess (GIDC), which amounts to Rs40 billion,” an official said. The textile industry is to pay a total of Rs80 billion in GIDC arrears. With the scrapping of taxes and duties on cotton import, the government would lose Rs14.6 billion in customs duty, Rs6.9 billion in additional customs duty and Rs7.7 billion in sales tax, the official projected.


PKR strengthens against $

The rupee strengthened against the dollar at Rs138.1/Rs138.6 in the inter-bank market on Friday compared with Thursday’s close of Rs138.5/Rs139, according to forex.pk. Last year in November, the rupee fell to an all-time low at Rs144 against the dollar in intra-day trading before recovering to Rs139.05 in the sixth round of devaluation since December 2017. Cumulatively, the rupee has lost 31.8percent of its value in the last 13 months. In October 2018, a slump in the value of the rupee came after the government decided to knock at the International Monetary Fund’s (IMF) door to avoid default on import payments and debt repayments. The central bank said economic data showed that the positive impact of recent stabilisation measures had started to emerge gradually. “Particularly, the current account deficit is showing early signs of improvement,” said the SBP. Earlier, the central bank said it “will continue to closely monitor the situation and stands ready to intervene in case of any unwarranted volatility in the foreign exchange market.”

SPI rises 1.65pc

The Sensitive Price Indicator (SPI) for the week ended January 31, 2019 registered a surge of 1.65percent for the combined income group, going up from 238.21 points in the prior week to 242.14 in the week under review. However, the SPI for the combined income group rose 8.89percent compared to the corresponding week of previous year. The SPI for the lowest income group increased 0.64percent compared to the previous week. The index for the group stood at 222.21 points against 220.8 in the previous week, according to provisional figures released by the Pakistan Bureau of Statistics. During the week, average prices of 15 items rose in a selected basket of goods, prices of nine items fell and rates of remaining 29 goods recorded no change.

China comes to Pakistan’s rescue with $2.5bn loan

China has agreed to provide $2.5 billion in loans to Pakistan to boost official foreign exchange reserves that are not sufficient to provide cover to even two months of imports despite receiving $4 billion loans from two Middle Eastern countries. “Beijing will place the $2.5 billion in deposits with the central bank,” a top government functionary told. With the anticipated $2.5 billion deposits, China’s contribution in this fiscal year alone would surge to $4.5 billion.

In July, China had also deposited $2 billion with the State Bank of Pakistan. In the past five years, China has emerged as Pakistan’s single largest saviour in times of economic crisis.

The money is coming as part of the government’s strategy to secure breathing space till the time its macroeconomic stabilisation measures take effect.

After coming into power, Prime Minister Imran Khan had visited China, Saudi Arabia and the United Arab Emirates to arrange emergency loans to avoid a looming default.

Resultantly, Pakistan has secured $14.5 billion worth of commitments from these three countries that have helped largely bridged the external financing gap of the ongoing fiscal year.

Feb 2019: Ogra increases lpg price by rs65 per cylinder

The Oil and Gas Regulatory Authority (Ogra) has increased the price of 11.8kg cylinder of liquefied petroleum gas (LPG) by Rs65 for February 2019.

A notification issued by Ogra read that the revised price of 11.8kg domestic cylinder would be Rs1,426.70, which was Rs1,361.70 in January.

However, contrary to the government’s notified price, LPG is being sold at exorbitant prices, indicating weak administrative control of the government. In different parts of the country, including the main urban centres, LPG is being sold at more than Rs1,950 per cylinder.

According to the notification, the producer price of LPG – propane 40percent and butane 60percent, the two components of LPG – has been determined at Rs63,738.16 per ton. The producer price included the excise duty of Rs85 per ton but excluded the petroleum levy. Based on the per-ton price, the producer price of 11.8kg cylinder has been calculated at Rs752.11.

Govt releases dollar bonds for expats

The government on Thursday launched five-year dollar-denominated diaspora bonds at an interest rate of 6.75percent, which is higher than the price at which Pakistan had issued the last two bonds of same tenor. Officially called as Pakistan Banao Certificates, the government invited the overseas Pakistanis to invest in three-year paper at 6.25percent interest rate and in five-year bonds at 6.75percent interest rate. Prime Minister Imran Khan officially launched the bonds at a ceremony at his office. He said that the balance of payments crisis “was not over” yet — a stance that was different from an earlier statement by the Finance Minister Asad Umar. Umar also said on Thursday that the balance of payments crisis was not over but there was improvement in it. Umar described the diaspora bonds as his “out-of-the-box solution” to Pakistan’s persistent external sector problems. The bonds have been launched to raise funds for the current account deficit financing, as the gross official foreign currency reserves remained at $8.2 billion only, despite loans from Saudi Arabia and United Arab Emirates. The $8.2 billion reserves are not enough for even seven weeks of imports. It was the second appeal that Prime Minister Khan had launched. Earlier, he had appealed to the overseas Pakistanis to give donations for building dams. “I appeal to the overseas Pakistanis to invest in Pakistan Banao Certificates,” Prime Minister Khan said. Overseas Pakistanis can invest in the bonds by June 30, State Bank of Pakistan Governor (SBP) Tariq Bajwa said. The interest rates were relatively higher because the bonds were meant only for overseas Pakistanis, said Dr Ashfaque Hasan Khan, a member of the Economic Advisory Council.

Check Also

Gulf News  

Gulf In Focus

Free zones lift UAE non-oil trade by 2.5% to dh1.2 trillion The UAE’s non-oil foreign …

Leave a Reply