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Business Recorder
24-07-2025
- Business
- Business Recorder
ADB keeps growth outlook unchanged
ISLAMABAD: The Asian Development Bank has downgraded the growth outlook for South Asia for FY 2026 slightly but kept the outlook for Pakistan unchanged. According to Asian Development Outlook July 2025, the ADB lowered its growth forecasts for economies in developing Asia and the Pacific this year and next year. The downgrades are driven by expectations of reduced exports amid higher United States (US) tariffs and global trade uncertainty, as well as weaker domestic demand. The growth outlook for South Asia for 2025 is 5.9 percent. Pakistan secures $1 billion financing facility with ADB-backed guarantee In Pakistan, the accelerated decline in food and non-food prices for the first 11 months of FY2025 revised the inflation forecast for FY2025 downward, while the outlook for FY2026 remains unchanged with 5.8 percent and 3 percent GDP growth. The slight downward revisions for GDP growth in India and Sri Lanka in 2025 are primarily due to the effects of US tariff policies, while Bhutan's downward revision reflects weaker-than-expected industry performance in the first quarter of 2025. The growth forecast for the subregion in 2026 is 6.2 percent. South Asia's inflation is forecast at 4.4 percent in 2025, from 4.9 percent in the April 2025 ADO, and retained at 4.5 percent in 2026. India's inflation forecast for FY2025 has been revised downward to 3.8 percent, reflecting faster-than-expected decline in food prices due to better agricultural production, while the FY2026 forecast remains unchanged. Likewise, Bangladesh's actual inflation is marginally lower than forecast for FY2025 amid easing global commodity prices and tighter monetary and fiscal policies, while the outlook keeps the FY2026 forecast the same in anticipation of continued tight policies and moderating global oil prices. The ADB forecasts the region's economies will grow by 4.7percent this year, a 0.2 percentage point decline from the projection issued in April. The forecast for next year has been lowered to 4.6percent from 4.7percent, according to Asian Development Outlook (ADO) July 2025 released on Wednesday. Prospects for developing Asia and the Pacific could be dented further by an escalation of U.S. tariffs and trade tensions. Other risks include conflicts and geopolitical tensions that could disrupt global supply chains and raise energy prices, and a worse-than-expected deterioration in the property market of the People's Republic of China (PRC). 'Asia and the Pacific has weathered an increasingly challenging external environment this year. But the economic outlook has weakened amid intensifying risks and global uncertainty,' said ADB Chief Economist Albert Park. 'Economies in the region should continue strengthening their fundamentals and promoting open trade and regional integration to support investment, employment, and growth.' Growth projections for the PRC, the region's largest economy, are maintained at 4.7percent this year and 4.3 percent next year. Policy stimulus for consumption and industrial activity is expected to offset continuing property market weakness and softening exports. India, the region's second-largest economy, is forecast to grow by 6.5percent this year and 6.7 percent next year—down 0.2 and 0.1 percentage points, respectively, from April projections—as trade uncertainty and higher US tariffs affect exports and investment. Economies in Southeast Asia will likely be hardest hit by worsened trade conditions and uncertainty. The ADB now predicts the subregion's economies will grow 4.2 percent this year and 4.3 percent next year, down roughly half a percentage point from April forecasts for each year. Bucking the downward trend are economies in Caucasus and Central Asia. The subregion's growth projections have been raised by 0.1 percentage points for both this year and next to 5.5percent and 5.1percent, respectively, largely reflecting an anticipated boost in oil production. Inflation in developing Asia and the Pacific is projected to continue slowing, amid easing oil prices and strong farm output reducing food price pressures. The ADB forecasts regional inflation of 2.0 percent this year and 2.1 percent next year, compared with its April projections of 2.3 percent and 2.2 percent, respectively. Copyright Business Recorder, 2025
Business Recorder
09-07-2025
- Business
- Business Recorder
Pakistan's tax-to-GDP ratio lags due to narrow tax net, informal economy: ADB
ISLAMABAD: Despite numerous reforms, Pakistan's tax-to-GDP ratio remains below regional averages, hindered by the limited reach of its tax system and the widespread prevalence of informal economic activity, says the Asian Development Bank (ADB). The bank in its latest report, 'Taxing informal and hard-to-tax sectors a policy guide', stated that Pakistan's experience shows that focusing solely on expanding the tax base without ensuring meaningful compliance among existing taxpayers yields minimal revenue gains and increases administrative costs. Nominal income tax revenue is increasing but there is no growth in real terms. The bank recommended that policymakers should consider that simply increasing the number of registered taxpayers does not equate to a more robust tax system. Pakistan secures $1 billion financing facility with ADB-backed guarantee Instead, they may need to focus on targeted approaches that enhance compliance among existing taxpayers while simplifying the tax process to encourage genuine participation. Revenue authorities operate with limited enforcement resources, necessitating strategic decisions about where to allocate these efforts for the greatest impact. The increase in registered filers has not translated into meaningful revenue gains and no substantial evidence of non-revenue benefits, such as improved economic formalisation or enhanced financial transparency, these policies appear suboptimal from a policy perspective. These measures impose compliance costs on taxpayers, administrative costs on the government, and hurt economic activity. The absence of measurable benefits against the backdrop of these significant costs suggests that the current approach may need re-evaluation to better align with sustainable fiscal objectives. Aggressive measures to increase tax filings do not necessarily lead to higher revenue collections or broader economic benefits. To this extent, Pakistan's experience is consistent with that of Rwanda, South Africa, Uganda, and other economies, where an expanded tax base did not result in higher revenue. In Pakistan's case, these policies expanded the tax base nominally but failed to generate significant revenue gains, as many new filers either reported minimal income or remained noncompliant in their actual tax contributions. A steady increase in nominal income tax revenue, rising from under Rs500 billion in 2007 to nearly Rs1,500 billion in 2021. This upward trend may convince policymakers and the public that reforms aimed at expanding the tax base and improving compliance are working. However, in real terms, tax revenue as a share of GDP has remained stagnant, fluctuating 3-4 percent for most of the period. This discrepancy suggests that while more revenue is being collected, little progress has been made in enhancing compliance or effectively capturing income from informal and hard-to-tax (HTT) sectors. This lack of growth in real revenue indicates that new tax filers are contributing little to overall tax collections, raising questions about the effectiveness of these costly compliance measures. The report noted that while the total number of tax filers has generally increased over the period, a substantial portion of the tax filers each year consists of individuals reporting zero tax payment. This highlights a key challenge in expanding the tax base. When revenue authorities focus too much attention on individuals and businesses that fail to file tax returns, a common response is for these taxpayers to register as filers but declare no or minimal taxable income. Non-compliance within the registered sector is a central theme of this report, underscoring that simply increasing the number of filers is unlikely to expand the fiscal capacity of the state. Existing evidence shows that the tax benefit of formalising a firm is often insignificant. Between 2014 and 2021, Pakistan tripled the size of its formal sector. The expansion of the tax base, however, did not translate into a corresponding increase in revenue: by 2021, the country was collecting nearly the same amount of tax revenue as it had in 2007. Pakistan has one of the lowest shares of the labour force in the PIT register at 7.6 percent, while Viet Nam has more registered taxpayers than individuals in the labour force. In Pakistan, the income tax gap for 2022 was estimated to be about 30 percent of total tax collected while the sales tax gap was estimated to be about 24 percent of tax collected. In recent years, Pakistan has implemented a range of intrusive, costly measures to broaden its tax base. These measures are aimed at increasing the costs of operating outside the registered tax regime by penalising non-filing. These measures include: Higher withholding tax rates on non-filers. A distinction between tax filers and non-filers, leading to differential withholding tax rates, was introduced through the Finance Act of 2014. This legislation marked the first instance where non-filers were subjected to higher withholding tax rates compared to filers. The primary objective of this policy was to incentivise tax compliance by imposing higher tax rates on individuals and entities that did not file their income tax returns. Over the years, the government has continued to adjust these rates and has introduced new categories for additional withholding. The Bank further stated that in general, the withholding tax rate applicable to non-filers is twice that of filers. In some cases, however, this rate is substantially higher (e.g., 20 times for sales to distributors and wholesalers). Restrictions on engaging in high-value transactions: To further discourage non-compliance, the government has imposed outright restrictions on non-filers to buy property and engage in other transactions. Since 2018, non-filers have been prohibited from purchasing properties valued above Rs5 million. Additionally, these restrictions apply to the transfer of property ownership, requiring both buyers and sellers to be registered taxpayers for transactions above the specified threshold. In addition to property restrictions, Pakistan has implemented bans on vehicle purchases and registration for non-filers. Mandatory proof of tax filing for professional licenses and contracts: To enforce compliance within the professional sector, the government has mandated that individuals provide proof of tax filing when applying for certain professional licences and government contracts. Consultants, contractors, and suppliers who wish to work with government entities must be registered tax filers, a requirement intended to formalise freelance and contractual work, which is often part of the informal economy. Additionally, certain professional bodies, such as bar councils, now require their members to be registered taxpayers. Measures against non-filing are becoming increasingly stringent over time. New proposals currently being contemplated include: Non-filers will be prohibited from undertaking international travel. Exceptions will include travel for religious or educational purposes. A proposed annual cash withdrawal limit of Rs30 million will be imposed on non-filers. Non-filers will be barred from purchasing immovable properties and vehicles. Copyright Business Recorder, 2025
Hans India
03-07-2025
- Politics
- Hans India
Delhi Water Minister helps revive ADB-funded supply project
New Delhi: Water Minister Parvesh Sahib Singh on Thursday approved the re-initiation of the Delhi Water Supply Improvement Project in the command area of Wazirabad Water Treatment Plant (WTP) under Asian Development Bank (ADB) funding. The project whose proposed funding was withdrawn by the ADB allegedly due to the previous government's poor progress, promises to benefit over 30.16 lakh people — approximately 13 per cent of the city's population. The Delhi Jal Board (DJB) gave a go-ahead to the project that covers an area of 123 sq km (8.3 per cent of Delhi), including Sanjay Gandhi Transport Nagar, Model Town, Burari, Lawrence Road, Punjabi Bagh, Shakur Basti, Jahangirpuri, Shastri Nagar, Avantika, and Pitampura. Originally sanctioned in 2013, the ADB-backed project remained unawarded until July 2020, leading ADB to withdraw funding, said an official statement. An official said the ADB has agreed to fund the project again after the intervention by Delhi Water Minister. The Board meeting also approved several critical projects aimed at improving public utility infrastructure. These projects will directly benefit lakhs of residents, ensure equitable water supply, reduce pollution in the Yamuna, and accelerate long-pending rehabilitation works. During the meeting, the Minister underscored the government's renewed focus on fast-tracking critical projects that were stalled due to bureaucratic delays and procedural hurdles. 'Providing clean drinking water and an efficient sewerage system is not just about pipelines and drains — it's about restoring the rights, dignity, and well-being of our people. We are reviving long-pending projects and taking bold decisions to improve the quality of life for every citizen,' he said. The DJB also approved a major reform empowering it to directly process and implement water supply and sewerage schemes for DDA and other land development agencies. The Board also approved the award of work for providing a comprehensive sewerage network in two colonies under the Sonia Vihar group of colonies – a project that will benefit 2.34 lakh residents. The sewer line will be spread over 66 km. Another major approval was granted for setting up a sewerage network in the Hasanpur Group of Colonies, covering eight villages Kharkhari Nahar, Kharkhari Jatmal, Kharkhari Rond, Pandwalan Kalan, Pandwala Khurd, Hasanpur, Asalatpur and Daulatpur at a cost of Rs 51.43 crore.
Business Recorder
25-06-2025
- Business
- Business Recorder
$350m loan agreement signed with ADB to boost women's financial inclusion
ISLAMABAD: The government of Pakistan and the Asian Development Bank (ADB) on Tuesday signed a $350 million loan agreement for the 'Women Inclusive Finance Sector Development Program (Subprogram-II)'. Sabina Qureshi, additional secretary of the Economic Affairs Division and Dinesh Raj Shiwakoti, Head Project Administration Unit, signed the loan agreement. Project Agreement for Financial Intermediary Loan (FIL) was signed by the State Bank of Pakistan. The ceremony was attended by senior officials from the government of Pakistan and the ADB. The signing of the agreement ensures government of Pakistan's commitment in fostering women's economic empowerment. Through improved access to finance, expanded entrepreneurship opportunities, and increased job creation, the programme paves the way for a more inclusive and prosperous future for women. Pakistan secures $1 billion financing facility with ADB-backed guarantee Subprogram II of WIF is built on the foundational policy reforms introduced under Subprogram I. It focuses on four key reform areas i.e. creating an enabling policy and regulatory environment for women's financial inclusion, increasing the supply of finance for women, strengthening women's entrepreneurship capabilities and promoting inclusive and equitable workplaces within the financial sector. The total financing package of $350 million (300 million Policy Based Loan and 50 million FIL) will significantly contribute to Pakistan's ongoing efforts for inclusive, resilient and sustainable development. Copyright Business Recorder, 2025
Business Recorder
19-06-2025
- Business
- Business Recorder
MoF signs 1bn loan facility backed by ADB guarantee
ISLAMABAD: The Ministry of Finance has signed a syndicated term finance facility of $1 billion partially guaranteed by a policy based guarantee of the Asian Development Bank (ADB)'s Programme 'Improved Resource Mobilization & Utilisation Reform'. An official statement by the Finance Ministry stated that Dubai Islamic Bank acted as the sole Islamic global coordinator while Standard Chartered Bank acted as the mandated lead arranger and book runners. Other financiers include Abu Dhabi Islamic Bank as the mandated lead arranger and Sharjah Islamic Bank, Ajman Bank and HBL as arrangers. The facility is a landmark transaction for the Government of Pakistan that demonstrates strong support from leading financiers in the region. ADB approves $800m financing for Pakistan This is a 5-year multi-tranche facility including both Islamic and conventional tranches. The Islamic facility was structured to be fully compliant with AAOIFI standards, and accounts for 89 per cent of the total financing amount. The remaining 11 per cent is from conventional financing. The transaction is also the first facility supported by ADB's Policy-Based Guarantee linked to policy reform measures undertaken by an ADB Member Country, i.e. Pakistan. The ADB Program is designed to support Pakistan to build long-term fiscal resilience and stability and has supported Pakistan's re-entry into international commercial markets, with significant interest from Middle Eastern Banks. Government of Pakistan has entered into the Middle Eastern financial market after nearly two and a half years, success of which indicates the renewed trust of the market in the fiscal stability and the overall improvement in the macroeconomic indicators of Pakistan. This transaction also marks the beginning of new partnership of Government of Pakistan with Middle Eastern banks, the Ministry added. Federal Minister for Finance Muhammad Aurangzeb recently stated that they have gone back to the commercial market in this fiscal year and are in the process of syndicating around $2 billion of commercial borrowing and expecting to shore up reveres from the current around $11-12 billion to $14 billion by end of the current fiscal year. Advisor to Finance Minister Khurram Shahzad, took to X formerly Twitter, and stated that Pakistan signed landmark financing deal with Middle Eastern banks backed by ADB - back into global markets after 2.5 years. Pakistan secures $1 billion landmark financing with ADB-backed guarantee and strong Middle Eastern banks' support. Government of Pakistan re-enters global markets with $1 billion syndicated financing. Pakistan attracts strong Middle East financing after 2.5 years. ADB-backed deal signals market confidence in Pakistan's economic reforms. This multi- tranche Islamic-conventional competitive financing deal with regional banks shows fiscal reform gains traction'. Copyright Business Recorder, 2025
