Business

Is govt weighing new laws to crack whip on currency hoarders, tax violators?

Published

1 year ago

Farwa

ISLAMABAD: The government has decided to turn up the legislative heat on the hoarders of foreign currencies — especially dollars — through penalties like heavy fines and imprisonment to discourage negative market forces from manipulating the exchange rate to their advantage, sources said Friday.

The new laws will be applicable to the exchange companies and the individuals found guilty of illegally stashing foreign currency in the country.

With few hours left to the unveiling of the budget 2023-24, sources told Geo News that the government was mulling raising the limit of the foreign currency allowed to be brought in from abroad up to $100,000 in a year. No questions would be asked regarding the source of the funds if the amount is less or equal to the aforementioned figure.

Currently, an amount of foreign currency equivalent to Rs5 million can be brought into the country without raising any flags.

The sources said that a proposal to impose penalties on non-filers has also been submitted according to which a maximum of 25% fine will be slapped on violators.

Under Section 165 of the Tax Ordinance, an Rs2,000 fine will be imposed on all those who don’t file their withholding tax statement.

On the other hand, the tax defaulters will face an additional Rs200 per day fine.

The recent development is seen as a hurried regulatory response to the US dollar’s record-breaking surge, reaching an unprecedented level of over Rs300.

The government has spun into action to put brakes on the “undesirable” outflow of foreign currency from Pakistan and promote transparency in foreign currency transactions conducted by exchange companies.

Amidst negotiations to revive a $6.7 billion bailout programme with the International Monetary Fund (IMF), Pakistan is not expected to devalue its currency further, as the pressure on the rupee has subsided, Bloomberg quoted Fitch Ratings as saying.

“We currently do not expect a large further devaluation of the Pakistan rupee,” Krisjanis Krustins, a Hong Kong-based director at Fitch, said in an emailed response to questions Friday.

“Although the currency has been very stable over the past few months, pressure on the reserves of the State Bank of Pakistan has also been contained, which suggests minimal interventions to support the currency,” Krustins said.

The IMF has stated that it is collaborating with Pakistani authorities to address concerns related to the country’s currency market and other matters before resuming the ongoing bailout programme, which is scheduled to conclude this month.

Following a currency devaluation in January, the rupee has depreciated by over 20% this year, rendering it one of the weakest performers globally.

The nation’s dollar stockpile has remained stable at about $4 billion since late February, after falling more than 50% in the past 12 months. Funds will be crucial to prop up the economy beset by supply shortages and avert a sovereign default, with billions of dollars of debt payments approaching.

“We continue to assume that the IMF and Pakistan will conclude the ongoing programme review, likely after the IMF has clarity on the upcoming budget,” Krustins said. “However, the window for this is rapidly closing, with the programme originally set to expire in June, and substantive progress unlikely in the immediate run up to elections due by October.”

Business

Gold prices in Pakistan approach an all-time high.

Published

21 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

22 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.