Connect with us

Business

Govt on fiscal tightrope as IMF talks set to begin today

Published

on

ISLAMABAD: The International Monetary Fund (IMF) is expected to discuss the deteriorating fiscal position which has been heavily affected by debt servicing which consumed the net revenue receipts of the federal government in the first quarter of the current financial year, reported The News on Thursday.

The IMF mission is expected to arrive in Pakistan today and remain till November 16 for the review ahead of the second tranche under the $3 billion Stand By Agreement (SBA).

Despite choking the release of funds for development projects and curtailing subsidies to the lowest levels, the government has been thumping on restricting budget deficit within the desired limits and especially converting the primary deficit into surplus for the first quarter of the current fiscal year.

“The IMF might raise the sustainability of such a tight fiscal position at a time when the government released development spending of just Rs40 billion against the allocation of Rs950 billion and restricted subsidies at Rs2.5 billion against the budgetary allocation of over Rs1,002 billion,” sources told The News.

However, the finance ministry officials believe that a downward revision of the policy rates is on the cards, and they have been planning for financing a budget deficit on preferably longer periods instead of relying upon shorter periods of treasury bills and domestic bonds.

“The average time to maturity will be stretched as much possible in order to reduce the over debt servicing bill in the remaining period of the current fiscal year,” said the official. The official claimed that the debt servicing bill would be curtailed within the allocated limit of Rs7.3 to Rs7.5 trillion for the current fiscal year.

Debt servicing consumed Rs1.4 trillion in the first quarter of the current fiscal year with the policy rate at 22%. The State Bank of Pakistan (SBP) on Wednesday raised Rs1,148 billion against the target of Rs975 billion, Rs173 billion higher than the target.

The 12-month yield declined by 40 basis points. The 3-month yield stands at 21.94%, 6 months at 21.98%, and 12 months at 21.99%. So overall, the market is indicating a slight reduction in the policy rates.

But the question is how would the government materialise its increasing revenue and expenditure requirements in the remaining months of the current fiscal year.

When contacted, Dr Khaqan Najeeb, former adviser to the Ministry of Finance, said an IMF programme is managed through prior actions, structural benchmarks, indicative targets, and performance criteria.

“It is safe to presume that first-quarter targets agreed with the IMF on fiscal, energy, monetary, and external are likely to be largely met. The fiscal shows a lower deficit at 0.9% vs last year and a primary surplus of 0.4%. The figures for meeting spending on income support of Rs87.5 billion are also likely to have been met. The SBP is yet to publish details of net international reserves, net domestic assets and SBP’s stock of net foreign currency swaps. But we are being assured that numbers are looking comfortable. There is probably no new borrowing by the government from SBP and the amount of government guarantees is also within the agreed limits. Hopefully, energy benchmarks are also within agreed limits,” said Dr Najeeb.

Dr Najeeb said it is also the quality of adjustments by Pakistan in reaching the first quarter targets that would be reviewed by the IMF.

“This review will affect the determination of how FY24 numbers will be met. There will likely be a dialogue on the external side where debt flows and exports are slower than anticipated. There is likely to be a discussion by the IMF of risks to the FBR collection target of Rs9,400 billion, which now requires a high growth of 33% over last year, along with expediting refund allocations,” said the former advisor.

Increased spending requirements on debt servicing of more than Rs1,000 billion compared to the budgeted amount of Rs7,300 billion along with a likely shortfall of exaggerated Rs600 billion provincial surplus will come under scrutiny by the IMF. This will set the tone for the updated Memorandum of Economic and Financial Policies, he concluded.

Business

April FDI in Pakistan increased to $358.8 million, according to SBP

Published

on

By

The inflow for April was $358.8 million, up 177% from $132 million in April FY23. Still, that was 39% more than the $258 million from March.

China was the largest investor, with $439.3 million in FDI from the nation between July and April of FY24—the greatest amount—as opposed to $604 million during the same period of FY23. In April, China accounted for $177 million of the total investment.

With $51.93 and 51.89 million invested in Pakistan, the United Arab Emirates and Canada came in second and third, respectively.

The power industry was the main draw for foreign investors in FY24, which ran from July to April. This period’s FDI in the power industry was $637.5 million, compared to $776.2 million the previous year. From $338 million to $460 million this year, Hydel Power garnered more attention.

Continue reading: In FY23–24, Pakistan’s per capita income increased to $1680.

According to a separate data released on Wednesday, Pakistanis’ per capita income increased to $1680 in FY2023–2024.

The size of the national economy grew from $341 billion to $375 billion in the current fiscal year, according to figures made public by PBS.

Throughout this fiscal year, Pakistanis’ yearly per capita income increased by Rs 90,534; the monthly rise was Rs 7,544.

Continue Reading

Business

OGRA forbids the purchase or sale of inferior LPG cylinders.

Published

on

By

The 313 LPG marketing and 19 cylinder-producing companies received notices from the OGRA, which described the act of refilling inferior LPGO cylinders as harmful.

Avoid supplying LPG to unlicensed distributors, the OGRA has cautioned LPG marketing companies. Only approved distributors will be able to sell and buy LPG going forward, per the notification, which states that new SOPs have been developed for the LPG industry.

Additionally, the warning said that the decision was made in an effort to preserve both lives and the business in response to an increase in cylinder blast occurrences.

Price reductions of Rs 20 per kilogramme for liquefied petroleum gas (LPG) were implemented in Quetta on May 3.

There is a reduction of Rs 20 on LPG prices, which means that the price per kilogramme drops from Rs 280 to Rs 260.

The costs of LPG were reduced by Rs 20 per kilogramme earlier, bringing the total decrease to Rs 40 per kilogramme over a few weeks. This is something worth noticing.

Continue Reading

Business

PIA announces a significant student discount.

Published

on

By

According to an airline spokesman, the national flag carrier has recently raised the baggage allowance to 60 kg.

Currently, PIA flies one flight per week on Sundays between Islamabad and Beijing.

The discount may be useful to students who intend to spend their summer vacations in Pakistan or who wish to return home after earning their degrees.

Before, students who wanted to visit China could now receive a 27% reduction on their fares through PIA.

On Eid ul Fitr, the national flag airline also reduced the cost of domestic flights by 20% for both economy and executive economy classes.

Continue Reading

Trending