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Express Tribune
3 days ago
- Business
- Express Tribune
Budget on track, June 10 confirmed
The government on Thursday insisted that no decision has been made to postpone the federal budget for fiscal year 2025-26, clarifying that the previously announced date of June 10 remains unchanged. The clarification came amid speculations regarding a possible delay due to Eid holidays. "The federal budget will be presented on June 10," Federal Finance Secretary Imdad Ullah Bosal told the media after exiting a committee meeting at the National Assembly. He said the National Economic Council (NEC) meeting date may be revised, while the upcoming fiscal year's budget is being finalised in consultation with the IMF. Moreover, Adviser to the Finance Minister Khurram Schehzad wrote on X that no decision has been made to postpone or reschedule the budget. "As communicated earlier, the upcoming Federal Budget FY26 is on schedule to be announced on June 10, 2025," he wrote. "Similarly, the upcoming Pakistan Economic Survey FY25 is scheduled to be announced on June 9, 2025."
Express Tribune
3 days ago
- Business
- Express Tribune
Govt mulls 1.5% tax on imports
At high tax rates, profit margins for sellers decrease, leaving them with options to pass on the burden to consumers, compromise on the quality of products, evade taxes or find cheaper illicit goods. photo: file Listen to article In what could become the single largest new revenue source in the budget, the government is considering imposing a 1.5% withholding tax on the value of imports. The tax would be collected by banks at the time of making payments to overseas suppliers. The measure, still under discussion, will be used as an enforcement tool to curb the widespread under-declaration of import values, a senior government functionary told The Express Tribune. He said that the tax would apply to commercial importers only, who would have the right to claim adjustments against their final tax liabilities. Currently, commercial importers pay withholding tax when filing goods declarations with the Customs Department. Under the new plan, however, the tax would be deducted when the payment is made to the foreign supplier through banking channels. Sources said the Federal Board of Revenue (FBR) has briefed the International Monetary Fund (IMF) about its proposal to tax imports at three key points: upon arrival, during shipment, and at the stage of payment to exporters. While it remains unclear whether the IMF has endorsed the proposal, the plan appears to be the government's biggest attempt in the budget at hitting the next fiscal year's tax target of over Rs14 trillion. Finance Secretary Imdad Ullah Bosal on Thursday said there were no plans to delay the budget presentation, reiterating thrice that it would be presented on June 10. Meanwhile, the Annual Plan Coordination Committee will meet on June 3, and the National Economic Council will convene on June 6 to approve macroeconomic and development plans for FY25. The proposed withholding tax would be deducted at the point of sending money abroad through letters of credit, said the sources. Banks would follow a model similar to how they deduct tax on overseas credit card payments. FBR spokesperson Dr Najeeb Memon and Chairman Rashid Langrial did not respond to queries on the matter for the purposes of this story. A recent report by the Policy Research Institute of Market Economy (PRIME), titled 'Combating Illicit Trade in Pakistan', estimates that the country is losing a staggering Rs3.4 trillion annually to black market activities. Of this, nearly 30% stems from misuse of the Afghan Transit Trade facility. These losses amount to 26% of the current fiscal year's total tax target. The report warns that illicit trade is eroding formal businesses, government revenues, and consumer safety. It highlights outdated border controls, minimal customs automation, a lack of risk-based profiling, and poor scanning technologies as key contributors to rampant smuggling. If passed by Parliament, the new withholding tax could offer the FBR a relatively easy way to collect revenue, especially since it would be implemented through banks. The tax authority has historically underperformed in areas where it must rely on its own enforcement rather than external withholding agents such as banks, provincial bodies, or employers. The government has previously relied on indirect taxation, including last year's controversial 20% federal excise duty (FED) on the packaged juice industry. The result was a 45% drop in sales, according to Atikah Mir, a representative of the industry. The Fruit Juice Council is lobbying for the FED to be reduced to 15%, arguing that the move would benefit both the industry and revenues. Meanwhile, another tool used frequently by the FBR is blocking genuine tax refunds to inflate revenues. On Thursday, Special Assistant to the Prime Minister Haroon Akhtar Khan met with a delegation from Utopia Industries to address their pending tax refunds. According to a statement from the Ministry of Industries, Utopia Industries — a leading exporter of mattress covers, pillows, comforters, and plastic products — has been unable to recover more than Rs3 billion (approximately $10 million) despite submitting all required documentation. The company, which began operations in 2020 with a $50 million investment, now ranks among Pakistan's top 12 exporters by revenue and leads in the number of containers shipped abroad. It is also one of the top two sellers on Amazon, with annual revenues of $170 million. All of its products are branded under its own name and carry Pakistani origin labels, distributed widely across households in the United States, Canada, and the UK. According to company officials, Rs600 million in sales tax refunds are pending from the April-January period, despite refund payment orders having been generated. An additional Rs700 million in refunds has been deferred for the same period, and Rs350 million in income tax refunds have been stuck since 2022. Utopia's representatives also met the finance minister in Washington, DC, last October and have filed a complaint with the Federal Tax Ombudsman, but the matter remains unresolved. The company says it has reached out to multiple stakeholders, including the All Pakistan Textile Mills Association, the Pakistan Textile Council, the commerce and planning ministers, and even the Special Investment Facilitation Council and the Pakistani ambassador to the USyet the issue persists.
Business Recorder
15-05-2025
- Business
- Business Recorder
Federal Budget: Aurangzeb holds virtual consultations with IMF
ISLAMABAD: Federal Finance Minister Senator Muhammad Aurangzeb reaffirmed Pakistan's commitment to continue economic reforms as per IMF recommendations under the $7 billion Extended Fund Facility (EFF) programme. Finance Minister stated this while participating in a virtual meeting with the International Monetary Fund (IMF) to discuss Pakistan's economic reforms and preparations for the FY 2025–26 budget. The talks were also attended by Secretary of Finance Imdad Ullah Bosal and other key members of the economic team. The IMF was briefed on the country's ongoing economic reforms, fiscal consolidation efforts, and budgetary proposals for the upcoming financial year. He welcomed Iva Petrova, the newly-appointed IMF Mission Chief for Pakistan, and expressed appreciation to outgoing Mission Chief Nathan Porter for his support and cooperation during his tenure. FY26 budget: IMF team to hold consultations During the meeting, the IMF team, led by its mission chiefs, assured Pakistan of continued support for stabilising the national economy. Discussions covered key issues such as achieving a primary surplus, enhancing provincial tax revenues, restructuring state-owned enterprises, privatisation initiatives, and right-sizing of public sector institutions. Virtual consultations between Pakistan and the IMF on the upcoming budget are ongoing, with both parties working towards aligning economic policies and reform measures.
Express Tribune
10-05-2025
- Business
- Express Tribune
Delhi kisses the dust as IMF approves $2.4b Pakistan loan
In a diplomatic embarrassment for India, the executive board of the International Monetary Fund on Friday approved two packages worth $2.4 billion, including a new $1.4 billion facility to mitigate climate challenges. The global lender approved the $1 billion worth second loan tranche of the Extended Fund Facility and sanctioned a new $1.4 billion Resilience and Sustainability Facility (RSF), said the Pakistani authorities. The IMF board approved the deals by rejecting India's unwarranted objections to the financing package. New Delhi in total disregard to the IMF's charter tried to politicise the balance of support facility. Pakistan's economic team, Finance Minister Muhammad Aurangzeb and mainly its Secretary Finance Imdad Ullah Bosal, put a lot of work into keeping the programme on track after initial setbacks. The Deputy Prime Minister Ishaq Dar used his good terms with the Pakistan Peoples Party to fulfill some pending conditions, including the introduction of Agriculture Income Tax laws in Sindh and Balochistan. The IMF would immediately release the $1 billion second loan tranche under the EFF while the $1.3 billion would be disbursed over a period of next 28 months. With the approval of the $1 billion second tranche due to Pakistan's better fiscal performance, the total disbursements under the EFF would reach $2.1 billion. The tranche would once again increase Pakistan's gross official foreign exchange reserves to $11 billion. The better than expected performance of foreign remittances has also helped sustain the reserves in double digits despite making some major foreign debt repayments. Prime Minister Shehbaz Sharif showed satisfaction over the approval of the $1 billion tranche while denouncing India's dirty tricks to block the approval. The IMF did not give a favour to Pakistan by approving these loans, as being the Fund member the country has a right to seek a programme. Islamabad qualified for the tranche only after meeting tough conditions that the IMF had set including putting more burden on the people. The deals were reached after both sides made some adjustments in the 25th Extended Fund Facility (EFF), including lowering tax targets in absolute terms, setting a new deadline to trim the Pakistan Sovereign Wealth Fund and opening the economy to foreign companies. India undertook an unwise move to block the approval despite having only 2.7% voting rights, the second defeat in less than 72 hours after losing five fighter jets to superior Pakistan Air Force. The sources said that during the board meeting Indian representatives tried to block the approvals by arguing that Pakistan was a habitual borrower. The Indian representative argued that either the designs of the IMF programmes were ineffective or there were issues with the monitoring. However, the IMF approved both the packages on the grounds that Pakistan successfully met all the conditions set by the board for qualifying the second loan tranche. Pakistan will also impose carbon levy as part of the conditions of the new $1.3 billion programme with effect from July this year and increase water usage charges from next year as part of the conditions for the new facility. About two months ago, the IMF team had reached a staff-level agreement with the Pakistani authorities on the first review of the 37-month Extended Arrangement under the EFF, and on a new 28-month arrangement under the IMF's Resilience and Sustainability Facility (RSF) with total access over the 28 months of around $1.3 billion. Pakistan would continue fiscal consolidation to reduce public debt while creating space for social and development spending and reducing crowding out of private investment. Pakistan will also refrain from increasing current spending beyond that budgeted, indicating that no supplementary grants can be issued. The IMF has projected Pakistan's economic growth for this fiscal year at 2.6% but the inflation rate forecast has been reduced to 5.1%. For the next fiscal year, the IMF sees economic growth at 3% and inflation around 7.7%. The IMF has acknowledged the economic stabilization but said that there were still risks to Pakistan's economy. Among the risks are potential macroeconomic policy slippagesdriven by pressures to ease policiesalong with geopolitical shocks to commodity prices, tightening global financial conditions, or rising protectionism could undermine the hard-won macroeconomic stability . The IMF's new climate facility is meant to scale up climate reform efforts to reduce vulnerabilities to natural disaster risks and to build climate resilience. In return for the loan, Pakistan has committed to strengthen public investment processes across all levels of government to prioritize projects that enhance disaster resilience, said Porter. The government will also improve the efficiency of scarce water resource usage, including through better pricing mechanisms, he added. It will enhance intergovernmental coordination on disaster financing; improve information architecture and disclosure of financial and corporate climate-related risks; and promote green mobility to mitigate significant pollution and adverse health impacts, said the IMF.
Express Tribune
09-05-2025
- Business
- Express Tribune
India humbled again as IMF approves $2.3b packages for Pakistan
In a diplomatic embarrassment for India, the Executive Board of the International Monetary Fund (IMF) on Friday approved two packages worth $2.3 billion, including a new $1.3 billion programme. The global lender approved the $1billion worth second loan tranche of the Extended Fund Facility and sanctioned new $1.3 billion Resilience and Sustainability Facility (RSF). The deals have been approved despite India's unsuccessful move to block during the Executive Board meeting. Pakistan's economic team, mainly its Secretary Finance Imdad Ullah Bosal and Finance Minister Muhammad Aurangzeb, put a lot of work to keep the programme on track after initial setbacks. Deputy Prime Minister Ishaq Dar used his good terms with the PPP to fulfill some pending conditions, including the introduction of Agriculture Income Tax laws in Sindh and Balochistan. The IMF would immediately release the $1 billion second loan tranche under the EFF while the $1.3 billion would be disbursed over a period of next 28 months. With the approval of the $1 billion second tranche due to Pakistan's better fiscal performance, the total disbursements under the EFF would reach to $2.1 billion. India undertook an unwise move to block the approval despite having only 2.7% voting rights, the second defeat in less than 72 hours after losing five fighter jets to superior Pakistan Air Force. The deals were reached after both sides made some adjustments in the 25th Extended Fund Facility (EFF), including lowering tax target in absolute terms, setting a new deadline to trim the Pakistan Sovereign Wealth Fund and open economy to foreign companies. Pakistan will also impose carbon levy as part of the conditions of the new $1.3 billion programme with effect from July this year and increase water usage charges from next year as part of the conditions for the new Islamabad also reluctantly agreed to commence the study for phasing out the existing Special Economic Zones (SEZs) by 2035. About two months ago, an IMF team had reached a staff-level agreement with the Pakistani authorities on the first review of the 37-month Extended Arrangement under the EFF, and on a new 28-month arrangement under the IMF's Resilience and Sustainability Facility (RSF) with total access over the 28 months of around $1.3 billion. Pakistan would continue fiscal consolidation to reduce public debt while creating space for social and development spending and reducing crowding out of private investment. Pakistan will also refrain from increasing current spending beyond that budgeted, indicating that no supplementary grants can be issued.
