Foreign debt liability increases by Rs 1.909 trillion
January 27, 2014
The National Assembly (NA) was informed that due to devaluation of the rupee foreign debt burden increased by Rs 1.909 trillion during the last five years (2008-13).
According to the written details presented in the NA, the break-up of the year-wise impact of devaluation of rupee on foreign debt since 2008, during fiscal year 2008-09 (FY09) devaluation of rupee increased the foreign debt burden by Rs 582.194 billion, during FY10 Rs 211.200 billion, in FY11 Rs 25.807 billion, during FY12 Rs 458.738 billion, in FY13 Rs 228.224 billion and from June 2013 to October 2013 Rs 403.063 billion, making a total of Rs 1.909 trillion.
The government has contracted 18 foreign loans of $232.85 million from Islamic Development Bank (IDB) and Saudi Arabia during the period from July 1, 2013 to September 30, 2013. Interest rate on $132.850 million Commodity Murabaha Financing from IDB is 2.77 percent and the interest rate on $100 million loan for Neelum-Jhelum Hydropower Project from Saudi Arabia is 2.0 percent. The disbursements during the same period against the old loans signed prior to July 1, 2013 was $346.44 million. On September 4, 2013 the Executive Board of the International Monetary Fund (IMF) approved financing arrangements under Extended Fund Facility (EFF) for Special Drawing Rights (SDR) 4.393 billion or $6.64 billion at interest rate in the range of 2.0 percent to 3.0 percent to support the country’s economic reform programme. Pakistan has received an amount of SDR 360 million or about $544.5 million during August-October 2013 from the IMF.
Pakistan has been following a flexible exchange rate regime. Exchange rates in dollar and rupee in Pakistan are determined by supply and demand of foreign exchange in the domestic market. The supply of foreign exchange mainly comes from exports, remittances, foreign loans, foreign investments, etc, while demand arises due to imports, debt payments, etc. In case, demand is higher than the supply of foreign currency, exchange rate tends to depreciate and, vice versa. The value of rupee has primarily been determined by overall balance of payment position of the country. The State Bank of Pakistan does not target any particular level of exchange rate. Movement in the rupee against dollar in the current fiscal year is also a reflection of overall balance of payment position of the country.
No data of potential taxpayers identified by NADRA has been provided by NADRA to the Federal Board of Revenue (FBR). In view of importance of the matter a fresh initiative to expand the tax net has been launched by the government during the current financial year. This exercise makes use of data of economic activities of significant value that are indicative of significant asset creation or consumption expenditure by persons not on tax roll.
The data collected through third party sources includes motor vehicle registration, real estate purchase, educational institution fees, utility bills, sales tax invoices and the withholding tax payment data. So far notices requiring filing of return have been issued to 61,246 potential taxpayers during current financial year. Of these 30,355 notices were issued during the first quarter of the financial year and 30,891 notices were issued during the second quarter. The government aims to bring 100,000 new taxpayers in the net during the current financial year and an additional 100,000 in each of the following two years.
On November 30, 2013, the current account deficit was recorded at $1,885 million during July-November FY13. On November 30, 2012, the current account deficit was recorded at $684 million during July-November FY12.
The government borrows funds from the international market through domestic and foreign banks from time to time to build the foreign exchange reserves and strengthen the budgetary position of the country. Since June 1, 2013 the government has obtained foreign currency loan for $100 million from a consortium of banks comprising Standard Chartered Bank, United Bank Limited and Credit Suisse. The credit amount was disbursed in November 2013 at interest rate of LIBOR plus 4.0 percent for a period of one year.
Pakistan has not signed any currency swap agreement with India.
Two loan agreements, one with Germany and other with Saudi Arabia, have been signed during the period of present government. Interest rate on $27.22 million loan from Germany for Harpo Hydropower Project is 0.75 percent while the interest rate on $100 million loan from Saudi Arabia for Neelum-Jhelum Hydropower Project is 2.0 percent.
So far no disbursement or utilisation has been made under these loans.
No such proposal is under consideration of the government to exempt levy of sales tax on fertilizer, tractors and agricultural appliances and on other items or goods pertaining to farming. As replied above, no proposal is under consideration of the government to exempt levy of sales tax on the above goods or items.
The finance minister in his budget speech had stated, “We have to adopt a simple tax and tariff structure by abolishing the culture of SROs.” No deadline was fixed and the finance minister only emphasised that the culture of SROs shall be abolished. In line with his speech policy, maximum restraint is being exercised in issuance of SROs, and no new.
No such proposal in respect of collection of income tax on monthly basis is under consideration. However, sales tax and federal excise duty is already being collected on monthly basis and sales tax and federal excise returns are filed by the 15th of each month, in respect of sales of the previous month.