Total external debt recorded at $66.2bn till Q1 FY13
ISLAMABAD: The total external debt has been recorded at $63.8 billion and after including foreign exchange liabilities of $2.4 billion the total external debt and liabilities have been estimated at $66.2 billion till first quarter of fiscal year 2012-13.
This was revealed in the Debt Policy Statement 2012-13 released here on Monday.
Continue reading »
By Huma Siddiqi
It is an inherent rule of nature that an organism tends to seek the maximum benefit with the least amount of effort. That explicitly depicts how we as a nation of consumers behave. But its flip side also explains the exact reason why predators go after the feeblest. We as consumers experience life as it happens to us mostly because we are hooked to our needs and not willing to even twitch a muscle for our betterment, it is but natural that the helpless consumer gets statistically gang raped by all possible corporate and regulates or the coalition of the two. Continue reading »
By Khawaja Muhammad YousafM
Pakistan is a developing country in South Asia having a total estimated population of 177 million in 2011. The total civilian labour force is 58.41 million out of which 55.17 million is employed. At the time of independence in 1947, Pakistan was an agrarian economy where the contribution of agriculture towards gross domestic product (GDP) was 53 percent during the fiscal year 1950. However, major shifts in the sectoral shares have been occurred since then as the shares of agriculture, industry and services sectors towards GDP during fiscal year 2011 were 20.9 percent, 25.8 percent and 53.3 percent, respectively. Continue reading »
* Falls 6 points on the Global Competitiveness Ranking to 124th place among 144 economies
ISLAMABAD: Pakistan has been ranked among the bottom 20 of the 144 economies around the world in the Global Competitiveness Report (GCR) 2012-2013, released on Wednesday by the World Economic Forum (WEF).
According to the GCR 2012-13, Pakistan lacks a long-term view of competitiveness. The level of corruption and poor governance are some of the factors slowing down Pakistan’s economic growth, therefore ranking Pakistan at 124 among 144 other countries on the index. The WEF ranks countries on more than 100 economic indicators comparing 144 countries. Continue reading »
Following are important features of the Pakistan budget for Fiscal Year 2012-2013
Government employees salaries
The government on Friday announced 15% increase in the pay of all government employees and the personnel of armed forces, besides, revision in Basic Pay Scales 2008 by merging all ad-hoc relief allowances granted upto July 1, 2009.The government also announced 15 to 20 percent increase in the pensions of retired government employees.Finance Minister Dr. Abdul Hafeez Sheikh while presenting the federal budget proposals for the fiscal year 2011-12 before the National Assembly on Friday announced relief measures for the government employees as well as the pensioners.He mentioned the ad-hoc monthly allowance equal to 50% of basic pay was given to the government employees as well as increase in medical allowance and pension last year, and added that despite the tight financial position, the Government is aware of the difficulties being faced by the Government servants and pensioners.
In order to provide some economic relief to the civil servants as the personnel of the armed forces, the Finance Minister proposed increase in pay at the rate of 15% to all Government Employees and the personnel of Armed Forces with effect from July 1, 2011.
He further proposed that all the ad-hoc relief allowances granted upto July 1, 2009 may be merged in the Basic Pay Scales-2008 and to introduce the new pay scales.
The Finance Minister also proposed that existing Conveyance Allowance may be increased by 25% to all the employees in BPS 1-15 and their equivalent in the Armed Forces.
He said all the Civil Servants and Personal of the Armed may be allowed Conveyance Allowance at the prescribed rates irrespective of their place of duty.
The Finance Minister also proposed increase in miscellaneous allowance mostly admissible to the employees in BPS 1-15.
He also proposed Compulsory Monetization of transport facility to the Civil Servants in BPS-20 to BPS-22 of the Federal Government.
The Finance Minister said the pensioners who retired on or after July 1, 2002 may be allowed an increase at the rate of 15% in pension and those who retired on or before June 30, 2002 may be allowed an increase at the rate 20% in pension.
Pensioners
15 and 20 percent pension increase proposed during current fiscal year.Addressing a post budget press conference here, the Minister said “Pensioner who retired on or after 1-7-2002 may be allowed an increase of 15 percent and those who retired on or before 30-6-2002 may be allowed an increase of 20 percent.”
5 to 10% Capital Gain Tax (CGT) imposed on sale of property
The federal government, through the Finance Bill 2012-13, has imposed 5.0 percent to 10 percent capital gains tax (CGT) on sale of property and 2.0 percent capital value tax (CVT) on immovable properties in the federal capital.
Highlights of Budget-2012-13
• Total Budget volume is Rs.2,960 billion
• Gross Revenue Receipts (estimated) for Year 2012-13
Rs. 3,234 billion
• FBR sets Rs.2,381 billion tax collection target
• Rs.1,459 billion to be transferred to provinces under NFC
Award
• Budget deficit is likely to remain at Rs.1,185 billion
• Provincial Surplus estimated at Rs.80 billion
• Rs.70 billion to be allocated for BISP
• Rs.10 billion to be allocated for Export Development Fund
• 10% additional discount at Utility Stores on differet comodities for BISP card holders
• Govt to set up 2,000 new Utility Stores, 35,000 families to get relief
• 100,000 youth to get internships, technical training
• Bachelor, Master Degree Holders to get 40,000 internships each in public and private sector
• 20,000 Graduates to be imparted skilled training to fulfil domestic and foreign demand
• Govt to pay tuition fee of PhD and Master students belonging to Balochistan, FATA, Gilgit-Baltistan
• 20% adhoc relief in pay and pension of Federal Government
Employees
• Income Tax Exemption Limit enhnaced upto Rs.400,000
• Tax on Business Turnover reduced from 1% to 0.5%
• Withholding tax ceiling for cash withdrawl from banks enhanced from Rs.25,000 to Rs.50,000
• Federal Excise Duty on 10 items abolished
• Federal Excise Duty on cement reduced from Rs.750 to 500 per metric tonn
• 18 raw materials, 9 components being used for text books, stationary exempted from Customs Duty.
• Customs duty reduced from 10% to 5% on 88 raw materials of
Pharmaceutical Industry
• Growth rate remains at 3.7 % as compared to 3.4 % during last two years
• Pakistan repay $ 1.2 billion of loans to IMF
• Sales Tax rate reduced from 17% to 16%
• Current expenditure registers 10% decrease
• Total volume of grants reaches 70% of Divisible Pool
• Parliament passes 24 laws to empower women during last four years
• Inflation reduced to 11%, next year it will be cut down to single digit
• Tax Revenues registers 46% increase, tax collection increases from Rs.1327 billion to Rs.1950 billion
• Subsidy of Rs.50 billion given on fertilizer
• Indistrial growth rate projected to 3.4% this year against
3.1% last year
• Subsidies of Rs.1,250 billion given on electricity sector during last five years
• Govt injected 3500 MW of electricity to National Grid
• Pakistan to get 2 billion cubic feet of gas from Pak-Iran Gas pipeline, Turkmenistan-Afghanistan-Pakistan India gas pipeline.
• 500 million cubic feet of LNG will be made available for consumers
• Govt gave reilef of Rs.70 billion on petroleum products
• National Economic Council approved Annual Development Plan of
Rs.873 billion
• Federal Government share in Annual Development Plan is Rs.300 billion
• 200 projects completed under Public Sector Development Programme (PSDP) at a cost of Rs.300 billion.
• Govt allocates Rs.360 billion under PSDP for 96 ongoing projects
• Rs.69 billion earmarked for Electricity secton, WAPDA, Electric Companies will be given Rs.115 billion
• Rs.48 allocated for Water sector, Rs.44 billion for Social
Sector
• FATA, Gilgit-Baltistan, AJK to get Rs.37 billion
• Rs.16 billion allocated for Higher Education
• Rs.84 billion allocated for Transport and Communication (Rs.51 billion for NHA, Rs.23 billion for Railways)
• Balochistan share incrase upto 9.09% in Divisible Pool
• Govt accepted Rs.120 billion as royalty on gas sale from 1954 to 1991 for Balochistan
• Federal Government to finance 11500 jobs for Baloch youth
• Block Development Allocation enhanced up to Rs.16 billion for
Gilgit-Baltistan
• Rs.10 billion allocated for mega project in Gilgit-Baltistan
• Rs.17 billion allocated in PSDP for FATA
• Rs.12 billion for development projects, Rs.16.5 billion allocated for cuerent expenditure for Azad Kashmir besides a loan of Rs.8.5 billion
• Remittances by overseas Pakistan touch $ 13 billion mark during last two years
• Exports register 28% increase, volume touches $ 25 billion mark
PSDP envisages an allocation of Rs22.88 billion for the railway projects, Rs50.87 billion for highways, motorways and roads, Rs10 billion for ERRA projects, Rs34.56 billion for the construction of Chashma nuclear plant Nos. 3 and 4, Rs890 million for Karachi projects of 1000MW and 300MW, Rs370 billion for the re-construction of earthquake affected national highway, Rs329 billion for the restoration and expansion of Shahrah-e-Karakoram and Rs1.60 billion has been allocated for the restoration of Shahrah-e-Karakoram affected by the Attaabad lake
PSDP constitutes of Rs350 billion for federal development projects, while Rs513 billion for provincial governments’ projects.
Out of total PSDP, the federal share is Rs.350 billion, provincial share Rs.513 billion whereas Rs.10 billion would be spent for Reconstruction and Rehabilitation of Earthquake-hit areas.
Following are the main allocations in Federal PSDP:
— Rs.2177.8 million for Cabinet Division.
— Rs.791.5 million for Capital Administration and Development Division.
— Rs.135.0 million for Climate Change Division.
— Rs.653.8 million for Commerce Division.
— Rs.142.1 million for Communication Division (other than NHA).
— Rs.3205.2 million for Defence Division.
— Rs.2000.0 million for Defence Production Division.
— Rs.211.7 million for Economic Affairs Division.
— Rs.8.0 million for Establishment Division.
— Rs.25.0 million for Federal Tax Ombudsman.
— Rs.13616.0 million for Finance Division.
— Rs.200.0 million for ministry of Foreign Affairs.
— Rs.15800.0 million for Higher Education Commission.
— Rs.2591.4 million for Housing and Works Division.
— Rs.126.0 million for Human Rights Division.
— Rs.774.5 million for Industries Division.
— Rs.412.3 million for Information and Broadcasting Division.
— Rs.787.4 million for Information Technology and Telecom Division.
— Rs.195.0 million for Inter Provincial Coordination Division.
— Rs.6509.8 million for Interior Division.
— Rs.20055.2 million for Kashmir and Gilgit Baltistan Division.
— Rs.1200.0 million for Law, Justice and Parliamentary Affairs Division.
— Rs.311.1 million for Narcotics Control Division.
— Rs.495.0 million for National Food Security and Research Division.
— Rs.75.4 million for National Heritage and Integration Division.
— Rs.39167.4 million for Pakistan Atomic Energy Commission.
— Rs.400.0 million for Pakistan Nuclear Regulatory Authority.
— Rs.268.1 million for Petroleum and Natural Resources Division.
— Rs.37840.0 million for Planning and Development Division.
— Rs.325.0 million for Ports and Shipping Division.
— Rs.612.0 million for Production Division.
— Rs.2951.6 million for Professional and Technical Training Division.
— Rs.22877.3 million for Railways Division.
— Rs.806.8 million for Revenue Division.
— Rs.1311.3 million for Science and Technological Research Division.
— Rs.16000.0 million for States and Frontier Regions Division.
— Rs.140 million for Statistics Division.
— Rs.227.0 million for Textile Industry Division.
— Rs.47192.3 million for Water and Power Division (Water Sector).
— Rs.29655.0 million for WAPDA (Power).
— Rs.50727.2 million for National Highway Authority.
— Rs.27000 million for Special Programmes (PWP-I, PWP-II).
Amendments to Finance Bill (2012-13) approved by National Assembly
The government through amended Finance Bill (2012-13) has increased the number of tax slabs from five to six for the salaried class, slashed tax rate from one percent to 0.5 percent to be collected by manufacturers against sales made to dealers, distributors and wholesalers and rectified an error in the Finance Bill (2012-13) to reduce one percent turnover tax from one percent to 0.5 percent.
The amendments to the Finance Bill (2012-13) have been approved by the National Assembly here on Thursday. The said amendments would be made part of the Finance Act 2012. In budget 2012-13, the basic exemption limit has been raised for salaried and business individuals to Rs 400,000 and reduced the existing slabs from 17 to 5. Under Finance Bill (2012-13), these concessionary measures will exempt 64,420 taxpayers besides reducing the effective tax rates and providing relief to the entire salaried and business community. The FBR will suffer a revenue loss of Rs 4.5 billion by providing the relief to the salaried class.
Under the amended Finance Bill (2012-13), the FBR has increased the number of tax slabs from five to six, reducing the revenue loss of the government. The tax relief granted to the salaried persons in higher slabs would be slightly reduced under the revised slabs of the amended Bill.
The amended Finance Bill (2012-13) has given the following new six slabs for the salaried persons:- Where taxable income is Rs zero to Rs 400,000, the rate of the tax would be zero percent. Where taxable income is Rs 400,000 to Rs 750,000, the rate of tax would be 5 percent of the amount exceeding Rs 400,000; where taxable income is Rs 750,000 to Rs 1,500,000, the rate of tax would be Rs 17,500+10 percent of the amount exceeding Rs 750,000; where taxable income is Rs 1,500,000 to 2,000,000, the rate of tax would be Rs 95,000+15 percent of the amount exceeding Rs 1,500,000; where taxable income is Rs 2,000,000 to Rs 2,500,000, the rate of tax would be Rs 175,000+17.5 percent of the amount exceeding Rs 2,000,000 and where taxable income is Rs 2,500,000 and above the rate of tax would be Rs 420,000+20 percent of the amount exceeding Rs 2,5000,000.
A comparison of the 5 slabs for salaried persons proposed in the Finance Bill (2012-13) and six slabs in the Amended Bill revealed that the FBR has changed the proposed slabs rates for salaried taxpayers in the amended Finance Bill and earlier announced five slabs have now been spread into six. As per amended Finance Bill 2012, the first three slabs are same, however, by adding one new slab now it has been proposed to six instead of five.
The slab number four earlier covered the income ranging between Rs 1.5 million to Rs 2.5 million with maximum rate of 15 percent, while as per new proposed slab the income range has been squeezed to Rs 2 million. Now the new slab number four shall be ranging between Rs 1.5 million to Rs 2 million with maximum rate of 15 percent.
The slab number five earlier covered the income ranging above Rs 2.5 million with maximum rate of 20 percent, while as per new proposed slab the income range has been changed by creating slab (number five) of income range between Rs 2 million to Rs 2.5 million with maximum rate of 17.50 percent. A new slab at serial no. 6 has been added covering income ranging above Rs 2.5 million with maximum tax rate of 20 percent.
Through the amended Finance Bill (2012-13), the government has made it mandatory for all the authorities responsible for recording and registration of transfer of immovable property to withhold a minimum amount of 0.5 percent tax at the time of registration or transfer of property. Under the amended Finance Bill (2012-13), any person responsible for registering or attesting transfer of any immovable property shall at the time of registering or attesting the transfer shall collect from the seller or transferor advance tax at the specified rate. The advance tax collected under sub-section shall be adjustable and the advance tax under this section shall not be collected in the case of Federal Government, Provincial Government or a Local Government.
Geo News report
The government is expected to announce in the federal budget-2012-13 several reliefs in income tax, federal excise duty and sales tax on Friday evening.
Besides providing relief in income tax, a uniform sales tax at 16 percent has been proposed.
Geo News has obtained a copy of the federal finance minister’s budget speech to be made this evening, which proposes that the income tax exemption limit be raised by Rs50,000 i.e. annual income of Rs4,00,000 and above would be taxable from now on.
Five slabs has been suggested for the purpose of income tax, while an amount of Rs1000 per annum would be recovered from persons drawing salary of Rs35,000 on account of income tax.
Tax payer honour card has been introduced, which would entitle the taxpayers to certain facilities. Turnover tax rate is being cut to a half.
The government wants to gradually eliminate the presumptive tax system in three years. Five percent tax on importers is being reduced to 3 percent, while 1 percent tax on exporters will be reduced to 0.5 percent.
Withholding tax exemption limit of Rs25,000 on withdrawal of cash from banks is being raised to 50,000. Different rates of general sales tax to be done away with the imposition of a uniform 16 percent sales tax.
Sales on locally produced paper and canola ghee being declared zero rated. Sales tax on tea proposed to be reduced to 5 percent from 16 percent.
Custom duty highest rate instead of 35 will be reduced 30 percent. Besides custom duty on pencil, copy ink etc. is being abolished. Federal excise duty on cement is being reduced by Rs100 per ton. Custom duty on scrap used as fuel in cement factory will be reduced to 10 percent from 20. Custom duty on 94 items of pharmaceutical raw materials is being abolished.
Excise duty on mobile oil, base oil, lubricant is being lifted, Federal excise duty on livestock insurance is being done away, while federal excise duty of asset management companies also being abolished.
Electricity for steel mills would be costlier, as sales tax on per unit electricity to this sector has been proposed to be raised to Rs8 from Rs6.
Agriculture sector posts 3.15 percent growth
The agriculture sector posted a growth of 3.1 percent during 20110-12 mainly due to positive growth in agriculture-related sub-sectors, except for the minor crops.
According to the Economic Survey of Pakistan 2011-12 on Thursday, major crops accounted for 31.9 percent of agriculture sector and experienced a growth of 3.2 percent in fiscal year 2011-12 as against the negative growth of 0.2 percent in 2011. The significant growth in major crops was contributed by rice, cotton and sugarcane by 27.7 percent, 18.6 percent and 4.9 percent, respectively.
Continue reading »
* Analysts say miniscule tax revenues, mismanagement and overgenerous subsidies mean country faces major financial crisis
Miniscule tax revenues, mismanagement and overgenerous subsidies mean Pakistan is heading for a new financial crisis, say diplomats and analysts, with this week’s budget unlikely to offer any respite.
The budget deficit stood at 6.6 percent of GDP last year, according to the State Bank of Pakistan (SBP), which warned that government borrowing was crowding out the private sector from access to credit. Continue reading »
Abdul Wajid Khan
Pakistan’s economy is facing the worst time of its history and witnessing some serious jolts. Pakistan is struggling to counter its current economic instability. The major problems of our economy are the result of increasing inflation, constant depreciation of the rupee against the dollar, mismanagement, corruption and bad governance. The increasing prices of petroleum products, low growth rate, energy crisis, menace of terrorism, worsening law and order situation add insult to injury.
Continue reading »
Shaukat M Zafar
Globalization is not new but in recent years it has become the subject of an impassioned debate. Karl Marx had predicted that the relentless search for markets will alter older social structures. As he put it “all that is solid will melt”. That prediction is going to be proven to be true in the today’s scenario. The policy of the government is to make Pakistan a private sector-driven economy where the government will only regulate. But privatization in Pakistan has been proved to be very controversial. It has generated strong debates in Pakistan where it is perceived to have more negative impact. Although it is an efficient way of promoting competition and enhancing growth, yet it has been experienced that it makes the poor poorer by increasing unemployment and reducing access of the poor to basic goods and services through increase in prices. The vast majority of people are worse off now than before. Continue reading »
National Investment Trust, Pakistan’s first and largest asset management company has introduced ATM card for its unit holders across the country. ATM card will enable customers to withdraw cash against instant redemption of their NIT units. NIT was formed in 1962, currently holding assets worth approximately Rs 82 billion, with around 60,000 unit holders. NIT’s distribution network comprises of 22 branches, 102 authorized bank branches all over Pakistan. Chairman and MD NIT Wazir Ali Khoja while setting the benchmark in mutual fund industry of Pakistan said NIT has been recognized as the beacon of positive change in the capital markets. NIT has led by example, with an aim to provide the necessary opportunity to all the stakeholders and to contribute towards healthy growth of the industry. The new service will definitely open new doors of convenience for NIT customers by having easy access to their cash 24 /7. Summit Bank President and CEO Hussain Lawai said “Summit Bank believes in customer satisfaction and is committed to provide innovative solutions to fulfil the financial needs not only of its own customers but also of the community at large.” NIT in collaboration with Summit Bank has introduced “Summit Bank-NIT co-branded ATM card.” NIT Unit holders will be able to withdraw cash using the entire Summit Bank ATM Network, or any 1-Link ATM network machines in Pakistan. NIT has five funds including The National Investment Unit Trust (NIUT), which is the Pakistan’s largest and oldest Mutual Fund. NI(U)T-LOC, NIT-State Enterprise Fund (NIT-SEF), NIT, Equity Market Opportunity Fund (NIT-EMOF), NIT Government Bond Fund (NIT GBF) and NIT Income Fund (NIT IF).
A message of hope for bewildered nation, Strategically positioned to influence world
Liaqat Toor/Tanvir Siddiqi/Ashraf Ansari
Pakistan is bound to come back as a great nation with one of the largest economies in the world in next ten years. Continue reading »
By Javed Mirza
Oil and gas sector in Pakistan has seen phenomenal growth since the independence in 1947, as till now 791 wells have been drilled by various local and international exploration companies with over 250 oil and gas discoveries, official data revealed. Continue reading »
Khalid A Khokhar
Amongst dozens of ongoing mega development projects in Balochistan, Reko-Diq gold and copper mining project is considered to be a big national strategic asset that would transform Balochistan as the richest province in the country. According to experts involved in mining and exploration, some 12.3 million tons of copper and 20.9 million ounces of gold lie in the Reko Diq area (EL-5) in the Chaghi area of Pakistan’s southwest Baluchistan province – bigger than those evaluated at Sarcheshmeh in Iran and Escondido in Chile. The discovery heralded attraction of all the 12 major companies involved in mining & exploration business with the mining magnets started “behind-the-scene lobbying” for getting the contract at Reko-Diq from Balochistan Development Authority (BDA). After due deliberations, a Canadian and Chilean company Tethyan Copper Company (TCC) was given the licence for exploring copper, gold and other base metals in EL-5 area, by the government of Balochistan. Under the agreement, 75 per cent shares were given to TCC and 25 per cent to the BDA. Reports emerging from various sources indicate that the US $52 billion of natural deposit will be sold for just US $08 billion to the TCC. The mind-boggling question is why 75% of reserves are being given to get 25% back after investing 25% in (EL-5) project? According to reliable estimate, only a small part of the Reko Diq gold and copper mines (EL-5) have deposits worth US $270 billion. Two licences (EL-6 & EL-8 other bigger deposits in the same belt) were given to the same company (TCC) on a 100 per cent ownership basis and without any share to the government of Pakistan.
Continue reading »
No one can dispute the fact that the economy today is caught perilously in a situation of low growth and high inflation. What brought the country to this pass is also uncontested – governments, both at the federal and provincial level, that over decades lived beyond their means. Continue reading »