Tag: Finance Ministry

  • Petrol price reduced by Rs10.2, diesel by Rs2.33 per litre

    Petrol price reduced by Rs10.2, diesel by Rs2.33 per litre

    The government has announced a reduction in the prices of petrol and high-speed diesel (HSD) by Rs10.2 and Rs2.33 per litre, respectively, for the upcoming fortnight. 

    In a notification, the Ministry of Finance stated that the prices of petroleum products have exhibited a mixed trend in the international market over the past two weeks. The Oil and Gas Regulatory Authority (Ogra) calculated the new consumer prices based on these international market fluctuations.

    The revised prices set petrol at Rs258.16 per litre and HSD at Rs267.89 per litre. 

    The Prime Minister’s Office described the reduction as a gift from the premier in anticipation of the upcoming Eidul Azha. 

    Sources previously indicated that the government intended to pass the benefits of lower international prices on to consumers. 

    Over the past two weeks, the prices of petrol and HSD in the international market decreased by approximately $3.75 and $2.7 per barrel, respectively. This follows a significant drop of about $12 per barrel for petrol and $8 per barrel for HSD over the prior month.

    The international price of petrol has decreased to just over $90 per barrel from about $94 per barrel, while the price of HSD has fallen to $95 per barrel from $98 per barrel.

  • Pakistan clears hurdles for IMF review, final agreement expected

    Pakistan clears hurdles for IMF review, final agreement expected

    The newly elected government of Pakistan has indicated its intention to secure a new loan from the International Monetary Fund (IMF).

    In line with this, representatives from the IMF are scheduled to visit Pakistan for the second review of the ongoing Stand-By Arrangement (SBA). The review is set to take place from March 14 to 18 in Islamabad.

    According to a statement released by the finance ministry, Pakistan has successfully met all structural benchmarks, qualitative performance criteria, and indicative targets required for the IMF review.

    This upcoming review marks the final evaluation of the SBA, with a staff-level agreement anticipated upon its completion.

    Once this agreement is reached, the final tranche of $1.1 billion under the SBA will be disbursed, subject to approval from the IMF’s Executive Board.

    Last summer, Islamabad secured a vital rescue package from the IMF, preventing a potential sovereign debt default.

    The successful completion of the final review is expected to unlock approximately $1.1 billion.

    Prime Minister Shehbaz Sharif has instructed his finance team, led by newly appointed Finance Minister Muhammad Aurangzeb, to begin preparations for seeking an Extended Fund Facility (EFF) once the standby arrangement concludes on April 11.

    The IMF has expressed readiness to develop a medium-term programme if Pakistan submits an application for one.

    Notably, the government has not officially disclosed the amount of additional funding it intends to seek through a successor programme from the IMF.

  • IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    IMF mission to arrive tomorrow for final review discussions on Pakistan’s SBA

    The International Monetary Fund (IMF) mission is poised to commence vital economic review discussions from March 14 to 18, 2024, marking the conclusive evaluation of Pakistan’s Standby Arrangement (SBA).

    Sources within the Finance Ministry have confirmed that the IMF mission is scheduled to touch down in Pakistan tomorrow night, kickstarting a series of pivotal discussions set to unfold over the next four days.

    During this intensive period, the IMF mission is slated to engage in comprehensive dialogue with Pakistan’s economic team. Key participants include representatives from the Finance Ministry, Energy Ministry, Federal Board of Revenue (FBR), State Bank of Pakistan (SBP), Planning Commission, and the Petroleum Division.

    Insiders suggest that the IMF mission will delve into discussions covering a spectrum of economic facets. Talks are expected to encompass various critical sectors, including finance, energy, taxation, and central banking.

    Furthermore, in parallel with these discussions, preliminary conversations are anticipated to unfold regarding the potential initiation of a new loan programme with the IMF mission. This prospect adds an extra layer of significance to the ongoing economic deliberations as Pakistan navigates its financial landscape in the pursuit of sustainable economic growth.

    Stay tuned for comprehensive coverage as the IMF mission engages in the final review of Pakistan’s Standby Arrangement, paving the way for crucial decisions that could shape the nation’s economic trajectory in the coming months.

  • Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan gears up for crucial IMF talks on $3 billion SBA programme

    Pakistan is set to commence vital discussions with the International Monetary Fund (IMF) concerning the completion of the second review under the $3 billion Standby Arrangement (SBA) programme.

    The formal invitation to the Washington-based lender is expected to be dispatched shortly after the formation and oath-taking of the federal cabinet, with negotiations anticipated to commence in the coming week.

    Simultaneously, Pakistan plans to request a new deal under the 36-month Extended Fund Facility (EFF).

    Sources have indicated that the size of the upcoming EFF programme is yet to be finalized, but Islamabad aims to explore the inclusion of climate finance to potentially increase the programme’s magnitude from $6 billion to $8 billion.

    A significant challenge facing the incoming finance minister is the pursuit of the Federal Board of Revenue’s (FBR) tax collection target of Rs890 billion for March 2024. Failure to meet this quarterly (Jan-March) target with the IMF may prompt additional taxation measures for the remaining fiscal year.

    Prime Minister Shehbaz Sharif chaired a high-level meeting on Tuesday to receive a comprehensive briefing from the FBR team on the future strategy for revamping the taxation system.

    The FBR has, to date, collected Rs5.82 trillion in the first eight months of the current fiscal year, experiencing a shortfall of Rs33 billion in achieving the February 2024 monthly target.

    To meet the targeted Rs9.415 trillion by June 30, 2024, the FBR must collect Rs3.58 trillion in the remaining four months (March-June) period.

    March 2024 holds particular significance, with the monthly target of Rs890 billion crucial for fulfilling the agreed third-quarter (Jan-March) period with the IMF.

    PM Shehbaz emphasized the immediate commencement of automation and digitization of the FBR, personally committing to monitor the entire process.

    According to The News, he urged the adoption of international best practices to enhance transparency, increase tax collection, and eradicate tax evasion, corruption, and smuggling.

    Expressing dissatisfaction with the current progress, PM Shehbaz directed the FBR to start the automation and digitization process immediately, urging the acquisition of services from international firms. He stressed the appointment of officers based on merit in the Track and Trace system.

    During the meeting, FBR Chairman Malik Amjad Tiwana briefed the prime minister on measures taken towards automation, tax net expansion, refund payments to exporters, and anti-smuggling efforts.

    PM Shehbaz, however, insisted on immediate progress, highlighting the collaboration with the Ministry of Interior and the Pakistan Army to combat smuggling effectively.

    As the meeting concluded, PM Shehbaz praised the efforts of caretaker finance minister Dr. Shamshad Akhtar and her team, commending their adherence to the policies laid by the previous government to avert default.

    The prime minister expressed confidence in achieving progress and prosperity through diligent efforts and adherence to the right direction.

    The meeting, attended by key officials, emphasized the urgency of digitalized invoicing and the inclusion of 1.5 million more individuals into the tax net, underlining the government’s commitment to fostering economic stability and growth.

  • ECC greenlights 25% sales tax increase on domestic cars

    ECC greenlights 25% sales tax increase on domestic cars

    In a significant development, the Economic Coordination Committee (ECC) of the Cabinet has given its nod to a proposal for increasing the sales tax on vehicles manufactured and assembled within the borders of Pakistan.

    The decision was finalised during a pivotal ECC meeting held in the capital city on Wednesday.

    The proposal, presented by the Federal Board of Revenue (FBR), suggested an elevation in the sales tax applicable to the auto sector, particularly on vehicles produced and assembled domestically.

    Following a comprehensive deliberation, the ECC cabinet sanctioned the process for determining a 25 per cent sales tax rate on locally manufactured and assembled vehicles.

    As per the endorsed proposal, vehicles valued at Rs4 million or equipped with 1400 cc engines will be subject to a 25 per cent sales tax.

    This taxation structure is anticipated to persist in the upcoming budget, signalling potential implications for consumers as a result of the price hike.

    The imposition of a 25 per cent sales tax on 1400cc vehicles is expected to have a direct impact on the pricing structure, leading to a potential surge in vehicle costs. The ECC’s decision aligns with ongoing efforts to streamline fiscal policies in the country.

    In addition to this decision, the ECC also greenlit a substantial subsidy of Rs7,492.75 million under the Ramazan Relief Package 2024.

    Chaired by Caretaker Finance Minister Shamshad Akhtar, the meeting aimed to address the financial aspects of the relief package, particularly subsidising the targeted beneficiaries of the Benazir Income Support Programme (BISP).

    According to a press statement issued by the finance ministry, the subsidy allocation is part of the budget for 2023–24, with a primary focus on providing support to those identified under the BISP. This move underscores the government’s commitment to social welfare initiatives.

    Furthermore, the ECC approved a proposal related to the “Permission to Import Wheat and Export of Wheat Flour under the Export Facilitation Scheme 2021.” This decision, brought forth by the Ministry of Commerce, reflects the government’s strategic measures to balance wheat supply and demand dynamics in the country.

    The ECC meeting signifies a pivotal moment in shaping economic policies, with decisions that carry far-reaching implications for both the automotive sector and social welfare initiatives in Pakistan.

    The approved proposals are poised to contribute to the broader economic landscape and address pertinent challenges in the nation’s fiscal framework.

  • Pakistan may enter fresh IMF loan programme, stricter conditions expected

    Pakistan may enter fresh IMF loan programme, stricter conditions expected

    In the wake of the completion of its current loan programme, Pakistan is poised to sign a new loan agreement with the International Monetary Fund (IMF), reports indicate. 

    The forthcoming Extended Fund Facility programme, anticipated to span three years, will see Islamabad share budget proposals for FY 2024–25 with the IMF. 

    Sources suggest that before finalising the agreement, Pakistan will provide assurances to the IMF regarding further increases in electricity and gas prices, as well as a commitment to reduce subsidies. 

    Finance ministry sources have disclosed that the conditions for the new loan programme are expected to be more stringent compared to the current Standby Agreement (SBA) programme. 

    Earlier discussions hinted at Pakistan securing another loan package from the IMF following the conclusion of the ongoing standby agreement. 

    The caretaker government has commenced consultations for the upcoming IMF programme, with talks expected to commence this month. 

    Officials from the finance ministry have indicated that the measures initiated by the caretaker government will be continued by the elected government in discussions with the IMF.

  • IMF greenlights $700 million for Pakistan’s economic stabilisation programme

    IMF greenlights $700 million for Pakistan’s economic stabilisation programme

    In a significant development, the International Monetary Fund (IMF) successfully concluded its first review of Pakistan’s economic reform programme on Thursday.

    This programme, backed by a $3 billion and-by a arrangement (SBA), has now received a boost with the immediate approval and disbursement of $700 million, as confirmed by the finance ministry.

    According to an official statement from the ministry, the completion of the first review by the IMF’s Executive Board, coupled with the payment of $528 million in special drawing rights, has elevated the total disbursements under the SBA to $1.9 billion.

    The infusion of funds from the IMF, combined with recent inflows from multilateral lenders, is anticipated to contribute to the stability of the Pakistani rupee, which has demonstrated relative steadiness over the past few months.

    The finance ministry highlighted that this fresh tranche would play a crucial role in facilitating rollovers from allied countries, including the United Arab Emirates, China, and Saudi Arabia.

    Additionally, it is expected to alleviate external debt repayment pressures faced by Pakistan.

    This positive development traces back to June 2023, when the IMF Executive Board granted approval for a much-needed nine-month arrangement with Pakistan to support its economic stabilisation program.

    The initial disbursement of $1.2 billion was promptly released in July, with the remainder subject to two quarterly reviews over the programme’s duration.

    The current IMF programme is slated to conclude in the second week of April, with the recent disbursement marking a significant step towards its successful execution.

    Notably, a staff-level agreement was reached in November 2023 between the IMF staff and Pakistani authorities, paving the way for the first review under Pakistan’s SBA.

    This agreement was contingent upon subsequent approval by the IMF’s Executive Board.

    Looking ahead, Pakistan is poised to receive the remaining amount in March under the $3 billion SBA.

    Despite facing challenging conditions, particularly persistently high inflation, which rose to 29.7 per cent in December from 29.2 per cent in the preceding month, Pakistan remains committed to navigating through these economic challenges with the assistance of international financial institutions.

  • Inflation may drop to 20-22% in the coming year: SBP report

    Inflation may drop to 20-22% in the coming year: SBP report

    In the Governor’s Annual Report 2022–23, released ahead of the upcoming national election, the Chief of the State Bank of Pakistan (SBP) conveyed that the country’s inflation is expected to decrease to approximately 20–22 per cent in fiscal year 2024.

    The SBP remains committed to making decisions aimed at preventing persistently high inflation. Notably, Pakistan’s economy fell significantly short of its fiscal and primary surplus targets in FY23, resulting in a contraction of the real GDP to 0.2 per cent.

    During FY23, Pakistan, with a population of 241 million, witnessed its highest-ever inflation, leading to historic lows in its currency value. The situation was mitigated by a $3 billion IMF bailout in July, preventing an imminent sovereign default.

    Governor Jameel Ahmed highlighted in the report that the Consumer Price Index (CPI) surged to 29.2 per cent in FY23, aligning with the upper bound of the bank’s revised projections.

    The SBP remains committed to anchoring inflation expectations to achieve its medium-term target of 5-7 per cent by the end of FY25.

    Fiscal and policy measures implemented before and after the bailout are contributing to stabilising Pakistan’s $350 billion economy as the country approaches the national election scheduled for February 8.

    Despite missing fiscal and primary surplus targets by a considerable margin, the SBP emphasises its dedication to curbing inflation.

    Simultaneously, the finance ministry anticipates a moderate inflation outlook for the remaining months of FY24, even with the upward revision of administered prices, particularly gas prices.

    According to the ministry’s monthly economic report, Consumer Price Index (CPI)-based inflation in Pakistan for December is projected to be in the range of 27.5-28.5 per cent.

    Looking ahead, the ministry foresees a further easing of inflation to 24–25 per cent in January 2024.

  • Pakistan expected to increase petroleum levy to get IMF loan 

    Pakistan expected to increase petroleum levy to get IMF loan 

    Pakistan has reportedly provided assurances to the International Monetary Fund (IMF) regarding an augmentation of the petroleum levy in the fiscal year 2024–25, aligning with its intentions to embark on a new loan programme. 

    According to documentation cited by sources within the finance ministry, Pakistan has committed to elevating the petroleum levy to Rs1,065 billion in FY2024–25, anticipating a revision of the current levy target from Rs869 billion to Rs918 billion.  

    The attainment of the revised target is contingent upon an uptick in the consumption of petroleum products. 

    The sources additionally revealed that the caretaker government would have implemented a Presidential Ordinance if adjustments were to be made to the current petroleum levy target. 

    Earlier revelations indicate that Pakistan is poised to secure another financial assistance package from the International Monetary Fund (IMF) subsequent to the conclusion of the existing standby agreement. 

    The caretaker government has initiated consultations in preparation for the forthcoming IMF programme. 

    Sources have indicated that talks between the government and the IMF for the new loan programme are likely to commence this month.  

    Finance ministry officials underscored the commitment of the elected government to advance the measures established by the caretaker government.