Business

Debt servicing up by 74% in first five months of FY24

Published

4 months ago

Farwa

Revenue surplus generated by the provinces declines as well.
Increasing markup payments a challenge for govt.
SBP’s Monetary Policy Committee is scheduled to meet next week.

ISLAMABAD: Amid high policy rates, Pakistan’s debt servicing in the shape of mark-up on principal and outstanding loans increased by 74% in the first five months (July-November) of the ongoing fiscal year compared to the same period of last fiscal year, reported The News on Thursday.

Furthermore, another challenge that has emerged on the fiscal front is the decline in the revenue surplus generated by the provinces. The revenue stood at Rs107.9 billion in the first five months of the current fiscal year against Rs 202.5 billion generated in the same period of the last financial year.

The main challenge confronting the government is the increasing markup payments in response to high policy rates that have led to an increase in the current expenditures significantly. However, the government is putting all efforts into controlling the non-mark-up spending which is evidenced by the rise in primary surplus during Jul-Nov FY24.

The SBP’s Monetary Policy Committee is scheduled to meet next week and if it increases the interest rate then debt servicing will eat more revenues in the months ahead and create difficulties for the Ministry of Finance.

During Jul-Nov FY2024, total expenditures grew by 43% to Rs4,831.0bn against Rs3,367.4bn last year. The current spending grew by 46% mainly due to a significant rise in markup payments that increased by 74 % during the first five months of the current fiscal year, while non-markup spending witnessed just a growth of 20% on account of the government’s curtailed spending.

The overall fiscal deficit stood at 1.3% of the Gross Domestic Product (GDP) equivalent to Rs1,375.4 billion in the July-Nov period of CFY2024 against Rs1,168.6 billion (1.4% of GDP) for the same period of the last financial year. However, the overall primary balance remained surplus to the tune of Rs1,542.1 billion in the first five months of the current fiscal year against Rs511 billion in the same period of the last financial year.

The government had agreed with the IMF to restrict the primary surplus at Rs397.2 billion or 0.4% of the GDP for the current fiscal year.

The fiscal deficit was slashed to 1.3% of the GDP (Rs1,375.4bn) in Jul-Nov FY2024 from 1.4% of the GDP (Rs1,168.6bn) last year. The overall fiscal deficit for FY2024 is budgeted at 6.5% of the GDP. The primary surplus improved owing to contained growth in non-markup spending. It posted a surplus of Rs1,542.1bn (1.5 % of GDP) during Jul-Nov FY2024 against the surplus of Rs511.0 billion (0.6 % of GDP) last year. During Jul-Nov FY2024, net revenue receipts have improved by 68 % to reach Rs3,347.7bn against Rs1,996.5bn last year. This performance is largely attributed to a sharp rise in non-tax collection by 114% (Rs1,757.2bn against Rs822.4bn last year) and tax collection by 30% (Rs3,484.7bn against Rs2,688.4bn last year).

The FBR tax collection increased by 30.3% to Rs4,469bn during Jul-Dec FY2024 against Rs3,429bn last year. During the period, the FBR collected more than the assigned target of Rs4,425bn, thus exceeding Rs44bn. The revenue performance indicates that tax policy and administrative measures are paying off in terms of continuous improvement in revenue collection.

Business

Pakistan’s gold prices are still declining; see the most recent

Published

1 day ago

Farwa

The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

Business

Pakistan and the IMF begin talks for a new loan.

Published

1 day ago

Farwa

Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

Business

Petrol prices are likely to drop significantly beginning May 16.

Published

1 day ago

Farwa

According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.