Business

‘Close’ to agreement with Pakistan on review: IMF chief

Published

11 months ago

Farwa

Policy-level talks close to success, say sources.
Windfall tax to be levied for financial years 2021, 2022.
IMF, economic team likely to prepare MEFP today.

International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva said that the review of the policy talks with Pakistan is expected to come within this week.

“I expect an agreement of the review to come within this week. So any day now,” said the global lender’s chief told Bloomberg on Wednesday while assuring the anchor that a deal was very “close”, as Pakistan inches closer to successful policy-level talks with the IMF.

“The Pakistani authorities and the minister of Finance deserve credit for, in a very difficult time, sticking to the programme that they had,” said the IMF chief.

She continued to say that the major issue in Pakistan was tax collection. “The country today collects 12% tax to GDP. We are saying [that] it has to be at least 15% to have the revenues, to sustain the functioning of your economy.”

“So, please, for the people in Pakistan that can pay taxes, collect it from them,” she added.

Meanwhile, officials privy to the ongoing talks between Pakistan and the IMF mission told Geo News, on the condition of anonymity, that Islamabad has agreed to impose a 40% windfall tax on the profits of the banking sector under the global lender’s conditions in a bid to secure the second tranche for the staff-level agreement under the $3 billion Standby Arrangement (SBA).

The IMF mission — led by Nathan Porter — and the Pakistani economic team have also completed discussions on all sectors, added the sources.

The Pakistani delegation was led by Caretaker Finance Minister Shamshad Akhtar and comprised State Bank of Pakistan (SBP) Governor Jameel Ahmad, Federal Board of Revenue (FBR) Chairman Malik Amjed Zubair Tiwan, and officials from the finance and energy ministries.

The sources further said that windfall taxes of up to Rs55 billion will be levied for the financial years 2021 and 2022. The taxes on the profits earned by the banks will be received in the month of December.

According to sources within the Finance Ministry, the Finance Bill does not require any amendments for the imposition of windfall tax on the banking sector.

“However, approval from the federal cabinet will have to be sought for the windfall tax,” added the sources.

Moreover, the IMF delegation and the economic team are likely to prepare the Memorandum of Economic and Financial Policies (MEFP) draft today, said the sources.

The parties have also agreed to not increase the interest rate further, added the Finance Ministry sources.

Business

Gold prices in Pakistan approach an all-time high.

Published

22 hours ago

Farwa

Following a substantial surge the prior day, gold prices in Pakistan are ascending to unprecedented levels with an additional gain on Thursday, coinciding with a rise in global precious metal rates.

The price of 24-karat gold in the local market rose by Rs700 per tola, reaching Rs277,900, as reported by the All-Pakistan Gems and Jewellers Sarafa Association (APGJSA).

Likewise, the cost of 10 grams of 24-karat gold increased by Rs600, currently priced at Rs238,254.

Globally, gold prices exhibited an upward trend, increasing by $7 throughout the day. The APGJSA reports that the international gold price was $2,682 per ounce.

Notwithstanding the increase in gold prices, the silver market exhibited stability, with the price of silver maintained at Rs3,050 per tola.

In the previous month, gold prices in Pakistan reached an unprecedented high of Rs 277,000 a tola, driven by substantial gains in the worldwide market.

Business

World Bank: Power industry subsidies soar by 400% in just five years.

Published

22 hours ago

Farwa

Ninety-four percent of domestic customers will benefit from the budgetary subsidy in 2024, according to a World Bank report, which credits the increase in protected consumers with contributing to the weight of subsidies.

In the current fiscal year, the electricity sector subsidy has increased by an astounding Rs. 954 billion, from Rs. 236 billion in the 2020 fiscal year to Rs. 1190 billion.

Notwithstanding changes, the circular debt has averaged Rs. 400 billion yearly over the last four years due to the incapacity to minimize losses and inadequate recovery of electricity payments.

According to the World Bank, the government must solve the fundamental problems in the power industry in order to lower the burden of subsidies and circular debt, as rising electricity prices and inadequate tax collection will only serve to worsen the circular debt crisis.

The rise in Pakistan’s power sector circular debt has raised worries from the World Bank (WB) despite an unprecedented increase in energy pricing.

Within the last six years, the debt has grown by 1241 billion rupees, according to the World Bank’s study. Between 2019 and 2021, the debt climbed by 1128 billion rupees.

The electricity sector’s circular debt has been increasing at an alarming rate, according to a World Bank analysis. Between 2022 and 2024, there was a substantial increase of 113 billion rupees.

Pakistan’s electricity industry has 2393 billion rupees in total circular debt as of 2024.

Restructuring is required to solve the circular debt issue, according to the World Bank.

Business

Final settlement: Govt to pay five IPPs Rs 72 billion.

Published

23 hours ago

Farwa

On October 10, Prime Minister (PM) Shehbaz Sharif declared that the agreements with five IPPS would be terminated in the first phase. Sources claim that the government will give Rs 15.5 billion to Rousch Power and Rs 36.5 billion to Hubco.

In a same vein, the federal government would pay Lalpir Power Rs 12.8 billion, Atlas Power Rs 15.5 billion, and Sapphire Power Rs 6 billion.

The sources state that late payment fees are not included in the settlement. With effect from October 1, the agreements with the five IPPs will be considered officially ended.

PM Shehbaz earlier remarked that the termination was carried out with the owners of the IPPs’ mutual permission while presiding over the federal cabinet meeting in Islamabad.

The Prime Minister notified the Cabinet that the only money that will be paid, interest-free, to these IPPs is the outstanding balance.

According to him, the national exchequer will gain over 411 billion rupees from the termination of these contracts, while power customers will save roughly sixty billion rupees.

According to Prime Minister Shehbaz Sharif, it was the result of the arduous teamwork of the entire government. In this regard, he also acknowledged the contributions and assistance of the associated parties. He specifically mentioned General Asim Munir, the Chief of Army Staff, who showed a personal interest in the situation.

The prime minister characterized the development as the start of a trip that will ultimately lead to the advancement and prosperity of the populace.

PM Shehbaz Sharif also brought up the assistance that the Punjabi and Federal governments gave to power users over the summer.