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Source : https://tribune.com.pk/story/2458524/pm-directs-hiring-of-foreign-consultant-for-fbr-1

PM directs hiring of foreign consultant for FBR​

Plans to modernise tax machinery signalling departure from previous govt’s restructuring plan

Shahbaz Rana
March 06, 2024

ISLAMABAD: Prime Minister Shehbaz Sharif, on Tuesday, directed the hiring of a foreign consultant to modernise the Federal Board of Revenue (FBR), indicating a departure from the previously approved restructuring plan. This decision emerged during the PM’s first comprehensive meeting on the administrative affairs of the FBR.

The PM stressed the urgent need to engage international consultants and suggested securing a waiver of international competitive bidding from the Public Procurement Regulatory Authority, if necessary, according to officials.

This move suggests that the Pakistan Muslim League-Nawaz (PML-N) government may not implement the FBR restructuring plan approved by the previous caretaker government.

Former Finance Minister Dr Shamshad Akhtar virtually attended the meeting and presented her plan. Dr Akhtar may again give a presentation to the PM on Wednesday (today) regarding her restructuring plan.

The foreign consultant will be hired to modernise and digitise the FBR, aiming to eliminate physical contact between tax officials and taxpayers. However, this decision also raises questions about the viability of two foreign loans worth $700 million obtained from the World Bank and the Asian Development Bank for domestic revenue mobilisation and FBR modernisation.

Government officials stated that the PM also expressed displeasure over the non-implementation of his eight-month-old orders to install scanners for monitoring various manufacturing units, particularly in the tobacco industry. The PM was informed that there were no funds available for procuring the scanners.

In the meeting, the former finance minister claimed that the FBR did not request funds, but the tax machinery did seek an increase in salaries.

The PM also instructed the hiring of competent individuals from the market to oversee the track and trace system, designed to address underreporting by tobacco manufacturers, beverage producers, sugar companies, and cement manufacturers.

The FBR has long been a contentious issue, and Tuesday’s meeting was no exception. The interim government exacerbated problems in the FBR rather than resolving them. The PM declared digitisation of the FBR as his top priority, stressing its critical importance for Pakistan. He also directed the enforcement of the digital invoicing initiative.

The International Monetary Fund has also called for a substantial increase in tax revenues, with a focus on expanding the tax net to include retailers and wholesalers. So far, its focus has remained on the salaried class and formal sector. FBR Chairman Amjad Zubair Tiwana briefed the PM on initiatives taken to combat corruption in the tax machinery, highlighting how digitisation of the FBR would help address corruption issues.

The FBR chairman mentioned that this fiscal year, they aim to bring an additional 1.5 million taxpayers into the fold. Legislation has been enacted for digitising invoicing, which the prime minister directed was for immediate implementation.

So far, the FBR has received fewer than four million income tax returns, about 35% less than the comparative period. Last tax year, nearly six million individuals and entities filed returns.

The PM commended the FBR for achieving the eight-month revenue target of Rs5.830 trillion. However, the FBR missed targets in the last months, and overall target achievement was possible only due to better performance in the first half of the fiscal year.

 

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Governor SBP inaugurates SAARCFINANCE seminar​

The Frontier Post

ISLAMABAD: Governor State Bank of Pakistan (SBP) Mr. Jameel Ahmad delivered the inaugural speech at the SAARCFINANCE Seminar on the ‘Potential Role of Big Data in Economic Policy.’ The event, held in Islamabad, brought together distinguished delegates, subject matter experts, and esteemed speakers from the SAARC region to discuss the impact and implications of Big Data in shaping economic policies.

Governor SBP emphasized that the unprecedented volume of data generated by digital devices underscore the potential of effective data utilization in contributing to sustained economic growth, societal welfare, poverty reduction, and improved living standards across the diverse SAARC region.

 

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[H3]To cut or not to cut: SBP might opt for caution in monetary policy[/H3]

• Reports by two brokerage houses suggest Pakistan's central bank poised to maintain cautious policy stance

BR Web Desk
April 19, 2024

Image generated by AI

The State Bank of Pakistan (SBP), scheduled to announce the key policy rate on April 29 (Monday), might opt to delay any easing of monetary policy as it looks to strike a balance between spurring growth and keeping inflationary pressures in check.

A report by brokerage house Arif Habib Limited (AHL) – in which it cited a divided poll result that suggested 52% respondents expect 'no change' in the upcoming announcement, while the remaining 48% see a cut – said the money market has also shown a mixed trend since the last monetary policy update.

The central bank's Monetary Policy Committee (MPC) had kept the key policy rate unchanged at 22%, its sixth successive decision to maintain the status quo, in its last announcement on March 18.

"Amidst uncertainty regarding the inflation outlook, key central banks in both advanced and emerging economies have continued to maintain a cautious monetary policy stance in recent meetings," the MPC had stated back then.

However, headline inflation decelerated to 20.7% on a year-on-year basis in March, data released on April 1 said, suggesting that a monetary easing cycle was on its way. Stocks have already rallied and the KSE-100 closed Friday at a record high.

AHL cautioned that market sentiment is still divided.

"In the primary market for Treasury bills (after the previous meeting), the changes have been marginal with the 3-month and 12-month yields showing no change, and the 6-month yield increasing by 0.99%," it said in a report on Friday.

"In the secondary market, the changes have been more varied: the 3-month yield rose by 0.43%, the 6-month by 0.13%, and the 12-month by 0.45%. There was no change in the 3-year yield, a slight increase of 0.05% in the 5-year yield, and a minor decrease of 0.02% in the 10-year yield.

These trends indicate a divided market sentiment regarding the current monetary policy stance, it added.

AHL said that rising global oil prices – which already resulted in the government hiking fuel prices in its previous announcement as it passed on the impact – are "complicating matters further".

"Anticipated fiscal measures in Pakistan's FY25 budget could (also) exacerbate inflationary pressures," it added.

"At the same time, ongoing negotiations with the International Monetary Fund (IMF), which has recommended maintaining a tight monetary policy, underscore the delicate balance the SBP must strike.

"With the IMF stressing the necessity for continuous economic adjustments and with Pakistan facing substantial debt repayments of $24 billion in the upcoming fiscal year, the SBP is poised to maintain a cautious policy stance."

Pakistan, which is currently enrolled in a $3-billion Stand-By Arrangement (SBA), looks set to resume another programme with the IMF. Finance Minister Muhammad Aurangzeb on Friday said Pakistan hopes a broad outline of the new loan would be agreed upon in May, just in time as Islamabad finalises and announces its annual budget.

AHL said that recent trends suggest a scenario that typically supports a case for lowering interest rates.

"This policy adjustment could rejuvenate economic growth by decreasing borrowing costs, thus improving the business environment and enhancing production.

"However, this potential shift arrives at a time when Pakistan's industrial sector shows signs of strain. For 8MFY24, the LSMI experienced a modest YoY decrease of 0.5%, with 11 out of 22 sectors marking negative growth, a clear indicator of a significant industrial slowdown.

"Furthermore, the government's borrowing costs have escalated alarmingly, reaching Rs4.2 trillion in 1HFY24, accounting for ~61% of total revenue."

In its report, AHL said a conservative approach aimed at stablising the economy while ensuring approval of a critical, new IMF programme might lead to a delay in monetary easing.

Separately, a report by another brokerage house Topline Securities also suggested a similar expectation.

In its survey, Topline said 51% of participants expect the policy rate to remain unchanged at 22%, while the remaining 49% anticipate a policy rate cut.

"We believe that the SBP will maintain cautious approach despite encouraging trends and adopt a 'watch and see' approach until the inflation trend maintain its fall," it said in a note.

 

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STATE BANK OF PAKISTAN

KARACHI - The State Bank of Pakistan will soon commission new currency for use in Pakistan, pending approval from the Federal Cabinet.

In this regard, new currency notes of denomination PKR 10 to PKR 5,000 will be issued NET December 2024.