Tag: pakistan economy

  • Painful IMF compliance, but no new taxes on agriculture and real estate, clarifies Dar

    Painful IMF compliance, but no new taxes on agriculture and real estate, clarifies Dar

    Finance Minister Ishaq Dar made a resolute declaration on Thursday, assuring the public that the coalition government, despite having taken stern measures that burdened the masses, has no intentions of imposing additional taxes on the agriculture and real estate sectors.

    Speaking passionately on the floor of the National Assembly, Dar firmly stated, “I want to state categorically […] that no new tax will be imposed on agriculture or real estate. We have endured much pain in meeting the IMF’s conditions.”

    This assurance comes in the wake of the International Monetary Fund (IMF) approving a $3 billion bailout program for Pakistan, with $1.2 billion already disbursed to help stabilise the nation’s struggling economy.

    Media reports had indicated that the IMF requested a plan from the government to impose taxes on the real estate and agricultural sectors as a condition to release the remaining funds. The news caused concern among those associated with the agriculture sector, especially since the government had expanded the loan volume to support it in the budget.

    Dar emphasised that all prior actions demanded by the lender had been successfully completed, and the agreement with the IMF was carried out in a transparent manner. He reassured the public, “No further burden will be passed on to the people. All the commitments made with the IMF are available on the finance ministry’s website.”

    The positive effects of the deal are already evident, with investors in the country experiencing relief in the stocks, exchange rate, and bonds markets. Additionally, longstanding allies Saudi Arabia and the United Arab Emirates have recently deposited $3 billion in Pakistan’s central bank, while China rolled over $5 billion in loans over the past three months to prevent the country from defaulting.

    In light of the IMF’s observation that both agriculture and construction sectors are under-taxed in Pakistan, economist Khaqan Hassan Najeeb stressed their significance in broadening the tax base and promoting progressivism.

    Regarding the real estate sector, Najeeb advocated for a genuine capital gains tax, levied at the marginal income tax rate of the individual making the capital gains over the years, to encourage investment from unproductive real estate to more productive sectors like manufacturing.

    Read more: Pakistan’s petroleum dealers temporarily postpone nationwide petrol pump shutdown

    However, Najeeb acknowledged that such reforms would be better suited for implementation by a long-term new government after the upcoming elections. Moreover, he highlighted that provincial governments hold authority over agriculture income tax, which presently contributes only insignificantly. He urged provinces to contemplate a progressive income tax on agriculture, considering the size of farm holdings.

    With Minister Dar’s assurance and the IMF’s support, Pakistan’s economic prospects seem brighter, but the road ahead calls for careful consideration and judicious decision-making to ensure a sustainable and progressive financial future.

  • Pakistan’s major industrial production drops by 14.37% in May, marking ninth consecutive decline

    Pakistan’s major industrial production drops by 14.37% in May, marking ninth consecutive decline

    Pakistan’s Large-Scale Manufacturing (LSM) sector suffered a substantial year-on-year decline of 14.37 per cent in May, according to data released by the Pakistan Bureau of Statistics.

    This contraction represents the ninth consecutive month of contraction for the country’s major industries during the outgoing fiscal year FY23. The primary cause behind this downturn can be attributed to a slowdown in the production of export-oriented textile and clothing sectors.

    The consequences of this decline in large industries are evident in the form of a significant number of job losses. The reduction in production capacity has unfortunately resulted in numerous individuals becoming unemployed.

    These statistics shed light on the challenges faced by Pakistan’s manufacturing sector and raise concerns about the overall economic performance of the country in the coming months.

    In May, the growth of LSM experienced a decline compared to the same month last year. The decline in April was 21 per cent, which is lower than the decline of 25 per cent in March, 11.6 per cent in February, and 7.9 per cent in January. In December 2022, there was a slight decrease of 3.51 per cent.

    In November 2022, there was a negative growth of 5.49 per cent, while in October 2022, it declined by 7.7 per cent. In September 2022, there was a decrease of 2.27 per cent compared to the same month last year. In August, there was a slight increase of 0.30 per cent after a decline of 1.67 per cent in July, which marked the first month of the current fiscal year.

    Between July and May, LSM also recorded a negative growth of 9.87 per cent on a year-on-year basis.

    In FY22, the LSM expanded by 11.7 per cent year-on-year. The production estimate for LSM industries was based on the new base year of 2015-16.

    During May, the production of 16 sectors shrank, while only four sectors experienced a marginal increase. The textile sector’s production decreased by 25.97 per cent compared to the previous year. The major negative growth was observed in yarn (29.89 per cent) and cloth (17.49 per cent), while nominal growth was reported in the production of other textile products.

    On the positive side, the production of garments grew by 12.86 per cent in May. Its performance remained positive in the first 10 months, except for February when it experienced a decline.

    In the food group, wheat and rice production decreased by 0.36 per cent and starch and its products by 2.15 per cent. However, there was an increase of 39.99 per cent in the production of blended tea, 24.45 per cent in cooking oil, and 23.80 per cent in vegetable ghee.

    In May, petroleum products witnessed a negative growth of 21.85 per cent, primarily due to a decline in the production of petrol and high-speed diesel. Almost all other petroleum products experienced a slowdown, except for jet fuel, kerosene, jute, and batching oil. The auto sector also suffered a 68.60 per cent slump in May, as the production of almost all types of vehicles declined.

    The production of iron and steel decreased by 5.83 per cent in May, mainly due to a decline of 15.09 per cent in billets/ingots, while non-metallic mineral products saw a marginal growth of 0.53 per cent. However, chemical products experienced a negative growth of 15.44 per cent in May compared to the previous year.

    In May, the production of pharmaceutical products decreased by 38.61 per cent, rubber products by 5.81 per cent, and fertilisers by 13.31 per cent compared to the previous year.

  • IMF reaches $3 billion stand-by arrangement with Pakistan, averting impending default

    IMF reaches $3 billion stand-by arrangement with Pakistan, averting impending default

    The International Monetary Fund (IMF) and Pakistan have reached a staff-level agreement on a stand-by arrangement worth $3 billion, announced the lender. This decision has been eagerly anticipated by Pakistan, a South Asian nation that is on the verge of default.

    The approval of the IMF board, expected in July, is required to finalise the deal. After an eight-month delay, this agreement brings some relief to Pakistan, which is currently grappling with a severe balance of payments crisis and dwindling foreign exchange reserves.

    The funding of $3 billion, which will be disbursed over a period of nine months, surpasses initial expectations. Pakistan had been awaiting the release of the remaining $2.5 billion from a $6.5 billion bailout package that was initially agreed upon in 2019, and which expired on Friday. As a result, the country’s stock and currency markets remained closed on that day.

    According to IMF official Nathan Porter, the new stand-by arrangement builds upon the 2019 programme. Porter acknowledged the significant challenges faced by Pakistan’s economy in recent times, including devastating floods last year and rising commodity prices following the war in Ukraine.

    He stated, “Despite the authorities’ efforts to reduce imports and the trade deficit, reserves have declined to very low levels. Liquidity conditions in the power sector also remain acute.” Porter further emphasised that the new arrangement would serve as a policy anchor and a framework for financial assistance from both multilateral and bilateral partners in the foreseeable future.

    Porter also highlighted the acute liquidity conditions in the power sector, characterised by mounting arrears and frequent power outages. Reforming the energy sector, which has accumulated a debt of nearly 3.6 trillion Pakistani rupees ($12.58 billion), has been a pivotal aspect of the discussions between Pakistan and the IMF.

  • Pakistani rupee records slight increase against US dollar, settles at Rs285.99

    Pakistani rupee records slight increase against US dollar, settles at Rs285.99

    The State Bank of Pakistan reported that the Pakistani Rupee (PKR) maintained an upward trajectory against the US dollar in the interbank foreign exchange market on Tuesday.

    The PKR experienced a gain of Rs0.072 against the greenback, resulting in a closing rate of Rs285.99. This marks an improvement from the previous day’s closing rate of Rs286.71.

    Experts attribute the rise in the dollar’s value to the government’s successful fulfillment of all conditions set by the International Monetary Fund (IMF).

    Prime Minister Shehbaz Sharif recently engaged in his fourth communication with the IMF Managing Director, Kristalina Georgieva, within a span of six days.

    It is worth noting that Pakistan’s ninth review by the IMF under the 2019 Extended Fund Facility, which aims to secure the release of $1.2 billion in funds, is still pending. With only three days remaining until the programme’s expiry on June 30, there is a pressing need to conclude the review process promptly.

  • Inflation worsens in Pakistan, affecting purchasing power of millions

    Inflation worsens in Pakistan, affecting purchasing power of millions

    The citizens of Pakistan, a poor country with a population of 220 million, have been struggling with record-high inflation due to the government’s inability to control prices. According to the weekly bulletin released by the Pakistan Bureau of Statistics (PBS), the weekly inflation increased by 46.82 per cent year-on-year and 0.15 per cent week-on-week, ending on April 27.

    The rise in the sensitive price indicator (SPI) was attributed to the increase in the prices of potatoes, chicken, wheat flour, gur, bread, and rice irri-6/9. On the other hand, there was a decrease in the prices of tomatoes, bananas, onions, sugar, LPG, pulse masoor, and mustard oil during the same period. The SPI for the week under review was recorded at 252.20 points, up from 251.83 points the previous week and 171.78 points recorded during the week ended on April 28, 2022.

    Fahad Rauf, head of research at Ismail Iqbal Securities, attributed the moderate increase in SPI mainly to the rise in the prices of potatoes and mutton. The price trend of perishable food items during the Eid week has been mixed, with the prices of some items going up and some going down. Ismail Iqbal Securities predicted that the CPI for April 2023 would come around 38 per cent, up from 35.4 per cent in March 2023, due to house rent revisions and higher wheat prices.

    The absence of the International Monetary Fund (IMF) programme and persistent inflationary pressures may result in another rate hike, as per Ismail Iqbal Securities. An interest rate hike could further discourage businesses, which have already postponed their expansion plans and hiring. Import restrictions have also added to the woes of industries and businesses that have faced frequent shutdowns, resulting in uncertain or no wages for millions of workers.

    The SPI is compiled by PBS by collecting prices of 51 essential items from 50 markets in 17 cities of the country. During the week, prices of 21 items increased by 41 per cent, while prices of seven items decreased by 13.73 per cent, and prices of 23 items remained unchanged, accounting for 45.10 per cent of the total. Various weightages are assigned to different commodities in the SPI basket, with milk, electricity, wheat flour, sugar, firewood, long cloth, and vegetable ghee having the highest weights for the lowest quintile. The price of milk and wheat flour increased, while the price of sugar decreased. The prices of electricity, firewood, long cloth, and vegetable ghee remained unchanged. However, the prices of all these commodities increased on a yearly basis.

  • US urges Pakistan to implement IMF reforms as economic crisis deepens

    The United States has urged Pakistan to take urgent action to implement the necessary reforms required by the International Monetary Fund (IMF) to address the country’s rising economic crisis. Inflation has been a major issue for Pakistan, and discussions between the two parties have been ongoing since January to find a consensus on multiple conditions before signing a deal that includes external financing from friendly nations.

    Elizabeth Horst, the State Department official in charge of Pakistan, stressed the importance of Pakistan’s compliance with the IMF’s agreed-upon reforms to ensure the country’s financial stability and avoid falling further into debt. She emphasised that although the reforms may not be easy, they are essential for the growth of Pakistan’s economy.

    Horst also expressed the US government’s concern over Pakistan’s economic situation and promised support for the country, particularly in policy, business, and transparency. She pointed out that the trade relationship between the two countries is already worth over nine billion dollars and will continue to increase.

    Highlighting the close cooperation between the US and Pakistan in areas such as trade and investment, climate change, and security, Horst revealed that the Pakistan-US Green Alliance has been initiated to further enhance these relations. She emphasised the importance of Pakistan’s sovereignty and that it is free to make its own choices.

    The State Department official also emphasised that both countries are working together to ensure regional security, counter-terrorism, and counter-narcotics. She expressed concern over the rising number of terrorist incidents in Pakistan and stressed the importance of continuing cooperation between the two countries to prevent Afghanistan from becoming a haven for terrorists.

    Horst concluded by stating that a peaceful and stable Afghanistan is in the interest of both Pakistan and the US. She emphasised the importance of pushing the Taliban to fulfill their promises for peace and stability, as thousands of lives have already been affected by terrorism.

  • Transporters overcharge passengers after fresh increase in fuel prices

    Transporters overcharge passengers after fresh increase in fuel prices

    The recent hike in petroleum prices has been met with public outcry, with many stating that the significant increase in petrol prices has severely impacted the common man, as transporters have raised fares just ahead of Eid-ul-Fitr. This rise in oil product prices is also expected to have repercussions on the cost of daily commodities, particularly kitchen items.

    The Statistical Department of Pakistan has reported that people were already facing 44.6 per cent inflation, and the weekly report showed that this figure was expected to increase further with the recent hike in petroleum prices. The price of petrol has been raised to Rs282 per litre, while high-speed diesel and light diesel oil rates will remain stable at Rs293 per litre and Rs174.68 per litre, respectively. However, kerosene oil has seen an increase of Rs5.78 per litre, with its price now standing at Rs186.07 per litre.

    Long route transporters have increased fares by 10 to 20 per cent per ticket, while freight services charges have risen by 30 per cent. Over 70 per cent of people have started to travel to their native towns to celebrate Eid-ul-Fitr with their families, and they have protested against the sitting government for the fresh increase in petroleum prices. The business community has also warned of a new wave of inflation, and the Pakistan Oil Tankers Association and All Pakistan Truck and Trailer Association have rejected the hike in petroleum product prices.

    Local transporters have also increased fares without permission, claiming that there is no government in the country. However, the District Regional Transport Authority (DRTA) Secretary has stated that they have started a crackdown against transporters who are overcharging passengers. The senior representatives of the trader’s community have also rejected the present hike in petroleum prices and have advised political parties to work together to boost the country’s economy.

    The All Pakistan Clerks Association (APCA) has stated that they are facing difficulties due to the government’s wrong policies and have decided to start a revolution after Eid-ul-Fitr against the wrong government policies. Wagon owners and drivers have protested at the termination points of their routes, while public transport operators in the Rawalpindi division will be meeting to discuss the situation. In summary, transporters, traders, and the general public have strongly reacted to the recent increase in fuel prices.

  • Man dies from heat stroke while waiting to collect free flour

    Man dies from heat stroke while waiting to collect free flour

    A man in Dera Ismail Khan died of a heat stroke while collecting free flour in Baisakhi ground.

    The deceased’s father, a resident of Zafarabad Colony, informed the authorities that his son, Waqas, fell sick and began vomiting upon arriving home from the collection centre. He was immediately taken to District Headquarters Hospital, where unfortunately, he was declared dead on arrival. A medical professional at the hospital’s trauma center stated that the cause of death was heat stroke.

    As per Dawn, the individuals who had come to obtain free flour at the distribution site claimed that inadequate amenities were responsible for the fatality. They reported arriving in the morning and waiting in lines under the scorching sun throughout the day.

    Officials from food and revenue departments present at the distribution site were accused of distributing flour unfairly based on nepotism and favoritism. The individuals present also mentioned the absence of any facilities at the distribution center.

  • Toyota IMC increases car prices by up to Rs2 million due to GST hike

    Toyota IMC increases car prices by up to Rs2 million due to GST hike

    Indus Motor Company (IMC) has increased the prices of all Toyota vehicles in Pakistan due to the recent hike in the General Sales Tax (GST) from 18 per cent to 25 per cent by the Federal Government. The models affected by the price hike include Toyota Yaris, Toyota Corolla Altis X, Toyota Hilux Revo (IMV III), and Toyota Fortuner (IMV IV).

    According to a circular released by the company, the economic uncertainties and extreme volatile situation of Pakistani rupee against US dollar have adversely impacted the cost of manufacturing for IMC. The company has therefore been compelled to pass on some impact to the market.

    The government of Pakistan has also enhanced the rate of Sales Tax to 25 per cent on all CKD vehicles with an engine capacity of 1400cc and above, except for IMV-I Single Cabin.

    Toyota Pakistan has stated that the mentioned car prices are subject to change and the prevailing prices at the time of delivery shall be applicable on all orders. Any change in Government levies and taxes, tariff, fiscal policies, import policies, forex, etc. will be on account of the customer.

    Here are the new prices of all Toyota cars after tax hike:

    Toyota Corolla Altis X latest prices

    Model Old price (Rs) New price (Rs) Hike (Rs)
    Toyota Corolla 1.6 MT 5,576,000 6,169,000 593,000
    Toyota Corolla 1.6 CVT 6,111,000 6,769,000 658,000
    Toyota Corolla 1.6 Special Edition 6,716,000 7,429,000 713,000
    Toyota Corolla 1.8 CVT 6,423,000 7,119,000 696,000
    Toyota Corolla 1.8 CVT SR 6,998,000 7,759,000 761,000
    Toyota Corolla 1.8 CVT SR BLK 7,039,000 7,799,000 760,000

    Toyota Yaris latest prices

    Model Old price (Rs) New price (Rs) Hike (Rs)
    Toyota Yaris 1.3 GLi MT 4,316,000 4,499,000 183,000
    Toyota Yaris 1.3 GLi CVT 4,588,000 4,789,000 201,000
    Toyota Yaris 1.3 ATIV MT 4,558,000 4,759,000 201,000
    Toyota Yaris 1.3 ATIV CVT 4,790,000 4,999,000 209,000
    Toyota Yaris 1.5 ATIV X MT 4,911,000 5,429,000 518,000
    Toyota Yaris 1.5 ATIV X CVT 5,213,000 5,769,000 556,000

    Toyota Hilux Revo latest prices

    Model Old price (Rs) New price (Rs) Difference (Rs)
    Hilux Revo STD 10,316,000 11,439,000 1,123,000
    Hilux Revo G MT 11,184,000 12,409,000 1,225,000
    Hilux Revo G AT 11,728,000 13,019,000 1,291,000
    Hilux Revo V 12,969,000 14,389,000 1,420,000
    Hilux Revo V AT ROCCO 13,675,000 15,179,000 1,504,000

    Toyota Fortuner latest prices

    Model Old Price (Rs) New Price (Rs) Hike (Rs)
    Toyota Fortuner G 4x2L 14,230,000 15,809,000 1,579,000
    Toyota Fortuner V 4×4 16,297,000 18,099,000 1,802,000
    Toyota Fortuner Sigma 17,175,000 19,079,000 1,900,000
    Toyota Fortuner Legender 18,112,000 20,129,000 2,017,000
  • Rev up your budget: Atlas Honda hikes motorcycle prices by up to Rs35,000 amid economic crisis

    Rev up your budget: Atlas Honda hikes motorcycle prices by up to Rs35,000 amid economic crisis

    The two-wheeler segment’s largest player in Pakistan, Atlas Honda, has raised motorcycle prices following a significant hike in car prices.

    This marks the company’s second rate hike in February, as they already increased the prices of their motorcycles by an amount ranging between Rs7,400 and Rs30,000 earlier this month.

    The new prices became effective on February 15.

    Model Old Prices (Rs) New Prices (Rs) Hike (Rs)
    CD 70 128,900 137,900 9,000
    CD 70 Dream 137,900 147,500 9,600
    Pridor 170,900 181,500 10,600
    CG 125 194,900 205,900 11,000
    CG 125 Special Edition 230,900 243,900 13,000
    CB 125 F 303,900 330,900 25,000
    CB 150 F 383,900 418,900 35,000
    CB 150 F SE 387,900 422,900 35,000
    Latest Honda Bike Price Feb 2023

    During the Finance (Supplementary) Bill 2023, Finance Minister Ishaq Dar announced a rise in the general sales tax (GST) rate to 18%, which is expected to lead to price hikes for various industries and sectors.

    Amidst Pakistan’s ongoing economic crisis, the automobile sector has been significantly impacted due to the depletion of foreign exchange reserves and a weakening rupee, leading to issues with opening letters of credit.