See More on Facebook

Business, Economics

Pakistan economic team reviews budget proposals

The country is under pressure from both the IMF and private sector.


Written by

Updated: May 27, 2019

With crucial meetings of the National Economic Council (NEC) and the federal cabinet lined up for the next few days, the government on Sunday firmed up budget proposals, including targets for taxation measures, for 2019-20.

Sources said a meeting presided over by Prime Minister’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh discussed various proposals that could create a revenue cushion of about Rs1.45 trillion in the next fiscal year, taking the year’s revenue target to Rs5.55tr from a dismal Rs4.2tr.

There was a general agreement that over Rs700 billion in additional revenue has to come from two areas — sales tax and income tax. The meeting also discussed some proposals for increasing general sales tax by 1 per cent or 1.5pc to yield over Rs350bn.

A member of the Federal Board of Revenue (FBR) underlined the need for reverting to an income tax regime in force before Miftah Ismail’s tenure as finance minister, by reducing exemption levels on income tax and increasing tax rates. (The PML-N’s finance minister had increased income tax exemption to Rs1.2 million from Rs0.4m and drastically reduced rates for all other incomes).

However, a majority of the functionaries did not agree to the proposal for total reversal of the existing regime and said the income tax burden should be kept low for those earning less than Rs10m.

The NEC, led by the prime minister and featuring representations from the provinces, is the country’s highest decision-making body on economic policy and has been called to meet on May 29 (Wednesday) to approve next year’s macroeconomic framework and development programme. A meeting of the cabinet will be held on May 28 to approve a budget strategy paper for the next year whose broad contours would be shared with the NEC.

According to an official statement, it was because of these two high-profile meetings that Dr Shaikh “reviewed the budget proposals”.

FBR chairman Shabbar Zaidi made a presentation about the budget proposals and suggested steps for expanding the tax base in line with the Rs5.55tr revenue target given to him by the government.

Dr Shaikh instructed the FBR to make the tax collection process easy and initiate measures to widen the tax net. The meeting was attended also by Adviser to the PM on Commerce, Textile, Industry, Production and Investment Abdul Razak Dawood and Minister of State for Revenue Hammad Azhar.

The meeting was given to understand that the increase in revenue would come from additional tax measures of about Rs500bn while Rs100bn or so would be generated through widening of the tax base with major contributions coming in the period following the amnesty scheme this year.

The FBR claimed that it could provide about Rs220bn or so through better monitoring and enforcement measures while about Rs520bn would automatically flow on account of the inflation rate of 9pc and 4pc economic growth rate targeted for next year. About Rs200bn would be generated through withdrawal of tax exemptions.

The sources said that recovery of about Rs200bn in arrears through settlement of litigations was not taken into account as a revenue source and would be considered a contingency in case of slippages on any of the abovementioned targets.

Finance Ministry’s spokesman Dr Khaqan Najeeb said in a social media statement that extensive work was under way for finalisation of a budget reflective of the needs of the economy. He said the government was taking all stakeholders on board through consultations and the private sector, including chambers, trade bodies and academia, was being encouraged to share proposals for the budget for 2019-20.

An official said the proposed budget strategy paper estimated the next year’s federal current expenditure at more than Rs6tr, including interest payments of more than Rs2.8tr and normal defence expenditure of about Rs1.28tr, which was more than 16pc higher than the original estimates for this year.

The NEC will consider a seven-point agenda, including a review of the Annual Plan 2018-19 and proposed annual plan for 2019-20 and draft 12th five-year plan (2018-23). The NEC will also review public sector development programme during the current year and approve next year’s development plan.

The government has already reconstituted the 13-member NEC. Besides the prime minister, it includes four federal cabinet members — Dr Shaikh, Mr Dawood, Makhdoom Khusro Bakhtiar and Dr Ishrat Hussain. Every province has two members in the NEC, including the four chief ministers. The other provincial members are Hashim Jawan Bakht, Nisar Ahmad Khuhru, Taimur Saleem Jhagra and Jan Muhammad Jamali.



Enjoyed this story? Share it.


Dawn
About the Author: Dawn is Pakistan's oldest and most widely read English-language newspaper.

Eastern Briefings

All you need to know about Asia


Our Eastern Briefings Newsletter presents curated stories from 22 Asian newspapers from South, Southeast and Northeast Asia.

Sign up and stay updated with the latest news.



By providing us with your email address, you agree to our Privacy Policy and Terms of Service.

View Today's Newsletter Here

Business, Economics

G20 draft calls for digital economy rules within the year

Digital laws have been proposed before in the past but is gaining traction ahead of the G20s. The leaders’ declaration for this week’s Group of 20 summit will call for creating a framework for drawing up international rules on the digital economy to be called the “Osaka track,” according to a draft obtained by The Yomiuri Shimbun. It will also call for achieving results within the year. The G20 leaders are scheduled to gather in Osaka on Friday and Saturday. In the draft, the section on the digital economy is part of a separate “Osaka statement.” The Osaka statement draft welcomes progress in discussions among about 80 interested World Trade Organization member states on an e-commerce accord. The draft expresses the G20’s support for rule creation and other developments in this area through the Osaka track. It states that the leaders vow to collaborate so people all over the world w


By The Japan News
June 27, 2019

Business, Economics

Korea, Saudi seek closer cooperation

The two sign MOUs, deals worth over $8 billion. President Moon Jae-in and Crown Prince Mohammed bin Salman of Saudi Arabia met in Seoul on Wednesday to discuss ways to strengthen cooperation in a wide range of areas. The crown prince arrived in Seoul earlier in the day and was met by Prime Minister Lee Nak-yon before moving on to Cheong Wa Dae for a welcoming ceremony followed by a meeting with Moon and his top aides. At the meeting, Moon stressed the importance of Korea-Saudi relations, highlighting economic projects between the two countries and Seoul’s involvement in Saudi’s Vision 2030 program. The Vision 2030 program is aimed at reducing the country’s economic dependence on oil and developing its public service sectors. “Korea is a strategic partner in Vision 2030, and the two countries are expanding the horizon of cooperation beyond construction and energy to ICT, smart infr


By The Korea Herald
June 27, 2019

Business, Economics

FedEx sues US Commerce Department over crackdown on Huawei

US courier delivery company FedEx on Monday sued the US Department of Commerce over a request that the package giant enforce restrictions on Chinese telecom equipment provider Huawei. In the lawsuit filed in the US District Court in the District of Columbia, FedEx claimed that department’s latest measures to restrict the business activities of US companies with Huawei “place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day.” “FedEx is a transportation company, not a law enforcement agency,” FedEx said in a statement. The department in May added Huawei and its affiliates to an “entity list,” a move that under Export Administration Regulations (EAR) barred US companies from supplying the Chinese company with parts such as electronic chips or providing other technologies without US government approval. Th


By China Daily
June 27, 2019

Business, Economics

Vietnam, EU to sign free trade agreement

The agreement will be signed in Hanoi on June 30. The European Council announced on Tuesday that it has approved the European Union – Vietnam Free Trade Agreement (EVFTA) and the EU – Vietnam Investment Protection Agreement (EVIPA), and assigned the EU to sign the deals with Vietnam on June 30 in Hanoi The EVFTA and EVIPA are the most ambitious agreements concluded between the EU and a developing country. Once the EVFTA takes effect, over 99 per cent of tariff on goods from both sides will be lifted. Vietnam will remove 65 per cent of import tariff on goods from the EU. Remaining tariffs will be removed in the next decade. Besides offering significant economic opportunities, the trade agreement ensures that trade, investment and sustainable development go hand in hand, by setting the highest standards of labour, safety, environmental and consumer protection. Meanwhile, the EVITA will h


By Viet Nam News
June 26, 2019

Business, Economics

US, China must compromise to reach deal: Chinese official

Both sides must come together in good faith for any progress to be made. Both China and the United States must be willing to compromise if they are to reach a deal when presidents Xi Jinping and Donald Trump meet at the G-20 Summit this week, a Chinese trade official has said. Vice-Minister for Commerce Wang Shouwen said at a news briefing yesterday that trade teams from both sides are in talks. He did not elaborate, but stressed that China negotiates on the basis of mutual respect, equality and mutual benefit. “An agreement reached has to be beneficial for both sides, and meeting each other halfway means both sides must be willing to compromise – not just one side giving way,” said Mr Wang, who is part of China’s negotiating team.


By The Straits Times
June 26, 2019

Business, Economics

Pakistan to get $3bn in deposits, direct investments from Qatar

Pakistan has recently received loans from the World Bank and investments from the Saudis. Qatar is making $3 billion dollars worth of new investments in Pakistan, in the form of deposits and direct investments, said Special Assistant to Prime Minister on Information and Broadcasting Dr Firdous Ashiq Awan on Monday. The economic partnership between Qatar and Pakistan will reach $9 billion, Qatar News Agency quoted foreign minister Sheikh Mohammed bin Abdulrahman Al Thani as saying. “The Qatari-Pakistani economic partnership will amount to $9 billion. Qatar affirms


By Dawn
June 25, 2019