PML-N leaders express concern over Pakistan’s economic situation: Report

Islamabad [Pakistan], November 17 (ANI): Lawmakers from PML-N have raised their concerns over the current economic situation of the country, particularly the continuous rise in inflation rate and higher dollar value, The Nation reported.
National Assembly Standing Committee on Finance and Revenue have raised serious concerns regarding the rise in inflation rate and dollar value and has summoned Pakistan’s Finance Minister Ishaq Dar next week, The Nation reported.
The committee held a meeting under the chairmanship of Qasier Ahmed Sheikh. Members of the National Assembly from PML-N have expressed concerns over the continuous increase in inflation rate and higher dollar value.
As per The Nation report, Barjees Tahir, PML-N Member of the National Assembly, said that prices of petrol, electricity and gas will further rise as per the direction given by the International Monetary Fund (IMF). He asked the government when will the inflation rate decrease which would give respite to the people.
Meanwhile, Committee chairman Qaiser Ahmed Sheikh said that inflation and dollar value were not in control. He asked which reforms have been initiated by the government in the past seven months, as per The Nation report. Qaiser Ahmed Sheikh stated that the incumbent government was continuously borrowing, which he stressed will not address the economic crisis.
Asim Ahmed, Chairman of the Federal Board of Revenue (FBR), has notified the parliamentary committee that tax collection will be reduced in the coming months due to a decrease in imports and currency appreciation, as per The Nation report. He informed that the IMF is also calling for additional revenue generation measures to address the tax collection shortfall.
According to him, FBR has collected Rs 2149 billion from July to October of the current fiscal year while the target was Rs 2144 billion. The FBR has succeeded in fulfilling its income tax collection target. However, it has not been able to achieve the targets of sales tax and customs duty in four months.
As per the report, the government might face a tax collection shortfall in the coming months as imports are expected to decline. Other reasons that are responsible for the reduction in tax collection are an increase in interest rates, floods and reductions in the development budget. The current political situation in Pakistan could also impact tax collection.
Asim Ahmed stated that the government is making efforts to improve tax collection through administrative measures as they have not announced a mini-budget. The committee was informed that 2.581 million tax filers have submitted returns while 3.6 million people had filed returns last time. The committee expressed its concern over the lack of an increase in tax filers and taxes being taken from existing filers.
Ayesha Ghaus Pasha, State Minister for Finance and Revenue, told the committee that Pakistan has faced losses following floods. She stated that the total Gross Domestic Product (GDP) will likely decrease and reach 2 per cent during the current fiscal year due to floods. The Committee was briefed regarding meetings with IMF and World Bank.
As per the report, the Pakistan government held “fruitful discussions” with multilateral stakeholders regarding the economic situation of the country after the flooding. The committee was informed that nine million people are expected to go below the poverty line and the growth rate will decrease by 2 per cent.
As per the report, a positive response from multilateral institutions, including Asian Development Bank, World Bank and Asian Infrastructure Investment Bank is expected.
Meanwhile, Pakistan’s risk of default, measured through the five-year currency default swap (CDS) index, on Monday increased by 4.2 percentage points reaching a new high at 64.2 per cent. The development indicates that Pakistan did not have the resources to make the growing import payments and foreign debt repayments in time, The Express Tribune reported.
Pakistan is due to repay $1 billion against a five-year Sukuk (Shariah-compliant bond) which is scheduled to mature on December 5, 2022. According to Topline Research, the yield (rate of return) on the Sukuk increased by 964 basis points in a day to 69.96 per cent. The increase in the yield is hinting that investors were thinking that Pakistan might default on the $1 billion Sukuk.
State Bank of Pakistan (SBP) Governor Jameel Ahmad has said that Pakistan had foreign exchange reserves of “over $9 billion, which are more than enough” for paying imports and repaying foreign debt.
The five-year CDS indicated a high risk of default after Pakistan announced that Saudi Arabia’s Crown Prince Mohammad bin Salman had postponed his visit to Islamabad. As per the report, Mohammad bin Salman had been expected to announce investments of more than $10 billion during his visit to Pakistan, which could have boosted Pakistan’s foreign exchange reserves.
On November 10, the MSCI in its semi-annual review announcement removed MCB Bank from its main Frontier Market (FM) index and added it to the Frontier Market small-cap index, The Express Tribune reported. Pakistan has only two constituents left in the MSCI FM index, including Lucky Cement and Oil and Gas Development Company.
MSCI has not informed about Pakistan’s weight in the index. However, it is estimated at 0.7 per cent and changes to the FM index will come into effect on November 30, as per the news report. Earlier, Pakistan was reclassified and kept in the MSCI FM from the Emerging Market in November 2021.
The MSCI noted that Pakistan had met the requirements for market accessibility under the classification framework for emerging markets. However, Pakistan no longer met the size and liquidity standards, which led to the reclassification. (ANI)