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Pakistan’s debt at ‘unsustainable’ levels, warns finance minister

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  • Dr Shamshad Akhtar says economic revival package on the cards.
  • Says govt to restructure FBR to increase revenue to GDP ratio.
  • We are trying to bring a equitable taxation system, says minister.

ISLAMABAD: Caretaker Minister for Finance Dr Shamshad Akhtar while admitting debt had reached “unsustainable” levels shared that the government is in talks with the provinces to shift responsibility for Benazir Income Support Programme (BISP), hand over provincial PSDP projects and close down devolved departments for rationalising expenditures, reported The News on Friday.

“Pakistan’s public debt breached the limits of Fiscal Responsibility and Debt Limitation Act since 2013-14 and it has reached unsustainable levels. There is no good news on the debt burden as multilateral institutions did not permit the restructuring of external debt. The G-20 had granted Debt Service Suspension Initiative (DSSI) during the Covid-19 pandemic. So far Pakistan has undertaken a debt arrangement with China of $2.4 billion till 2024-25,” she said while addressing an SDPI conference in Islamabad on Thursday.

Shamshad addressed all the macroeconomic issues confronting Pakistan and said they were moving towards a democratic transition, and an “economic revival package” was on the cards to achieve self-reliance and ensure integration of the economy with regional countries.

She warned that the debt restructuring talks should be dealt very carefully as it will have repercussions. However, she made it clear that Pakistan does not plan to delay repayments of external debt. The larger fiscal deficit pushed up the debt burden, so the country was forced to breach the Fiscal Responsibility and Debt Limitation Act since 2013-14.

On the domestic debt front, she mentioned the government was moving on the path of re-profiling to move from short-term debt to long-term bonds of 3 to 10 years to reduce the cost of borrowing. However, on external debt, she said options were limited as 44% of overall public debt was in the shape of foreign loans.

Dr Shamshad said the government would restructure the Federal Board of Revenue to increase the revenue-to-GDP ratio from 9 to 15% in the first phase.

“We are trying to place a fair and equitable taxation system,” she said and assured that the tax base would be broadened. The customs policy and operation would be separated with the objective of facilitating trade and eradicate smuggling.

The finance czar said that the GDP growth rate would hover around 2% to 3% in the ongoing fiscal year. She added that the business and investors’ confidence had been restored.

Quoting a WB report, she said Pakistan’s size of economy could touch $2 trillion if the macroeconomic stability was ensured till 2047 from existing levels of $300 billion.

The Viability Gap Fund (VGF) would be established whereby a public-private partnership would be developed to execute development projects with the participation of the private sector. All departments devolved under the 18th Amendment would be abolished at the federal level.

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

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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.

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OGRA forbids the purchase or sale of inferior LPG cylinders.

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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.

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PIA announces a significant student discount.

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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.

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