Latest news with #NationalTariffPolicy
Express Tribune
2 days ago
- Business
- Express Tribune
Time to keep rates unchanged
Pakistan's real long-term growth won't come from slashing rates prematurely; it will come from shifting the engine of growth towards productivity, not consumption. Photo: file Listen to article The State Bank of Pakistan (SBP) is set to announce its monetary policy decision on July 30, and all eyes will be on whether it cuts interest rates again or chooses to hold. In my view — as an analyst tracking macroeconomic and capital market signals closely — no change is warranted at this point. Pakistan has already seen a dramatic reversal in policy rates — from a staggering 22% to a relatively benign 11% as of May 2025. That's not just a rate cut; that's a full-blown pivot. While this brings welcome relief to borrowers and a much-needed growth stimulus, macroeconomics doesn't respond overnight. A monetary easing of this magnitude usually takes two to three quarters to trickle into the real economy. A premature cut now would be like offering dessert before the main course has even been served. Let's not overfeed an economy still digesting the last policy meal. The YoY inflation dip into the low-to-mid 3% range in recent months has largely been driven by the base effect, not necessarily a fundamental deceleration. With energy tariff adjustments, expected global commodity swings, and reduction in remittance incentives, inflation is likely to re-enter the 7-9% band by year-end. SBP's long-term inflation target band of 5-7% is admirable, but it must also guard real interest rates — ideally 3-5% positive — to sustain current account balance, contain imports, and maintain currency stability. History has shown that dipping below this zone leads to overheating, demand-pull inflation, and pressure on external buffers. We can't afford to repeat that cycle again. Don't light the fuse in year three SBP Governor Jameel Ahmad has repeatedly spoken about avoiding the boom-and-bust mistakes of the past — and he's right. The third year of any macro stabilisation programme is the most vulnerable: the temptation to cut too early is strongest, the political cycle begins to heat up, and the reserves appear deceptively comfortable. But here's the catch — Pakistan's FX reserves, while improved, are still largely propped up by bilateral rollovers, multilateral support, and deferred repayments. This is not the time to fire the bazooka. Instead, it's time to keep a measured hand on the lever, especially as tariff rationalisation under the new National Tariff Policy (NTP 2025-30) continues to lower energy costs for export-oriented industries. Cheaper electricity and gas — if passed on to the right sectors like IT, mining, value-added agriculture, light manufacturing and services — can help Pakistan grow its exports, climb global supply chains, and attract long-term FDI. Let exports earn the right to cut rates. Let Moody's and S&P reward discipline with credit upgrades. Let credit default swap spreads tighten, PIA and ZTBL get privatised, and DISCOs become financially viable. That's when we'll have truly earned macroeconomic space for deeper cuts. Remittance risk: the sleeping volcano Another red flag that must not be ignored is the government's rollback of incentives on incremental remittances — a move that could seriously dent the current account. The Rs200 billion ($700 million) subsidy in previous years catalysed nearly $8 billion in incremental inflows — a 10x multiplier by some measures. Removing this carrot risks not just a slowdown in remittances but also a hit to FX reserves and rupee stability. If remittances stall, and imports rise as expected (especially due to reduced duties on used cars and improved cotton harvest conditions), we could see import bills swell by 15-20% over the next two years, or $9-12 billion higher by FY27. Even with gradual 3-4% annual rupee depreciation, strong export growth and a 1-2% current account deficit might be manageable – but only if we resist the urge to cut early. Better tools than rate cuts Instead of cutting rates broadly, the SBP should fine-tune credit where it's needed most: a) Increase auto financing limits to support local manufacturers threatened by rising used car imports. b) Expand low-cost housing schemes to revive construction and employment. c) Enhance subsidised student and SME loans, especially in high-impact sectors like IT, logistics, and value-added exports. d) Scale up green financing tools, particularly EV loans, solar leasing, and youth/agribusiness schemes under PM's programmes. These targeted tools are far more effective than blunt rate cuts, and crucially, they don't unleash import-led growth. Time to hold Pakistan's real long-term growth won't come from slashing rates prematurely. It will come from shifting the engine of growth towards productivity, not consumption. That means: Strengthening local linkages in mining and agricultural exports; promoting value-added manufacturing with predictable energy and logistics policies; deepening integration into global IT and services value chains; and clearing fiscal clutter, like privatising loss-making state enterprises, to finally create room for sustainable interest rate compression. In the end, monetary policy is not a magic wand. It's a signal. And right now, the best signal SBP can send to global investors, credit agencies, and Pakistanis alike is stability, prudence, and patience. Because when you're walking a tightrope, the smartest thing you can do — is not jump. The writer is an independent economic analyst
Business Recorder
4 days ago
- Business
- Business Recorder
Housing finance subsidy scheme approved: Steel sector revival plan okayed by ECC
ISLAMABAD: The Economic Coordination Committee of the Cabinet endorsed the report of the Ministry of Commerce for the revival of steel sector and approved a mark-up subsidy and risk-sharing scheme for affordable housing finance. A meeting of the ECC was held on Friday under the chairmanship of Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb to deliberate on a range of important agenda items concerning industrial growth, environmental policy, skill development, housing finance, and telecommunications. The ECC reviewed and endorsed a report presented by the Ministry of Commerce on industrial competitiveness and export-led growth of the steel sector, in alignment with the National Tariff Policy 2025–30, aimed at reducing production costs and enhancing export competitiveness. Iron and steel industry: MoC proposes massive changes in tariff structure The committee also approved a summary by the Ministry of Commerce for filing an appeal in the Supreme Court of Pakistan against the decision of the Lahore High Court (LHC) regarding the grant of gas/RLNG tariff concessions to M/s Ghani Glass Ltd. The committee found the appeal tenable in light of the fact that concessionary energy tariffs for five export-oriented sectors have already been withdrawn and are no longer available to any sector. According to the report, the total production of the sector was 8.40 MMT MT in FY24 with long products accounting for 60percent, flat products 30 percent, tubes and pipes seven percent, and other products three percent of total iron and steel products. Similarly, per capita use of steel was merely 36kg as compared to the world at 247kg - 6.5 times higher than that of Pakistan. In a major step towards environmental sustainability, the ECC approved Pakistan's Green Taxonomy, as proposed by the Ministry of Climate Change and Environmental Coordination. The chair appreciated the initiative, noting that it was long overdue and would play a vital role in facilitating access to financing for green projects in the country. To support skills development through outcomes-based financing, the ECC approved a government guarantee of Rs1 billion for the issuance of the Pakistan Skill Impact Bond (PSIB), as moved by the Ministry of Federal Education and Professional Training. The committee encouraged the ministry to gradually move towards adopting the Public-Private Partnership model and to explore undertaking similar initiatives using its own balance sheet, thereby, reducing reliance on sovereign guarantees. In the housing sector, the ECC approved a mark-up subsidy and risk-sharing scheme for affordable housing finance, with the objective of expanding access to low-cost housing. The committee also urged the ministry to develop a comprehensive, integrated database of the housing sector in coordination with relevant federal and provincial stakeholders, in order to ensure better targeting and effective implementation of the scheme. The ECC was briefed by the Ministry of Industries and Production on the status of availability and pricing trends in the vegetable ghee and oil market. While noting the ministry's assurance regarding adequate national stock levels, the committee expressed concern over the limited pass-through of declining international prices to domestic consumers. It advised vigilant monitoring to prevent price distortions and potential cartelisation, and emphasised the need for active coordination with the Competition Commission of Pakistan, National Price Monitoring Committee (NPMC), and provincial governments through the Ministry of Industries and Production. The ECC approved a proposal by the Ministry of Information Technology and Telecommunication for the revision of charges for Radio-Based Services (RBS). The committee directed the ministry to ensure periodic revision of RBS charges every three to five years, aligned with ongoing economic changes and technological advancements in the sector. The committee also endorsed a revised composition of the advisory committee overseeing the release of IMT spectrum, which is critical for improving next-generation mobile broadband services in Pakistan. In conclusion, the ECC approved the formal declaration of ship breaking and recycling as a recognised industry, as recommended by the Ministry of Maritime Affairs. However, the committee instructed the ministry to coordinate with the Power Division and share relevant data on power consumption patterns in the sector, to enable accurate assessment of the implications of applying industrial power tariffs in place of the existing commercial rates. The meeting was attended by Federal Minister for Power Sardar Awais Ahmed Khan Leghari, Minister for Petroleum Ali Pervaiz Malik, Minister for Commerce Jam Kamal Khan, along with senior officials from relevant ministries, divisions, departments, and authorities. Copyright Business Recorder, 2025
Express Tribune
4 days ago
- Business
- Express Tribune
ECC approves 'Green Taxonomy' to support eco-project funding
Minister of Finance Muhammad Aurangzeb chairs a meeting of the Economic Coordination Committee on July 25, 2025 in Islamabad. Photo: Radio Pakistan Listen to article In a major step towards environmental reform, the Economic Coordination Committee (ECC) approved Pakistan's Green Taxonomy, proposed by the Ministry of Climate Change and Environmental Coordination. The finance minister lauded the move, calling it 'long overdue' and crucial for unlocking green financing. According to a press release issued by the Ministry of Finance, the meeting—chaired by Finance Minister Muhammad Aurangzeb—deliberated on a wide range of agenda items related to industrial growth, environmental sustainability, skills development, housing finance, and telecommunications. The ECC reviewed and endorsed a report by the Ministry of Commerce on enhancing industrial competitiveness and promoting export-led growth in the steel sector. The proposal aligns with the National Tariff Policy 2025–30 and seeks to reduce production costs and boost exports. Also Read: KSE-100 hovers around 140,000 The ECC greenlit a markup subsidy and risk-sharing scheme to promote affordable housing finance, aiming to expand access to low-cost housing. It further directed the development of an integrated database of the housing sector, in consultation with federal and provincial stakeholders, to improve implementation. The committee also approved a summary from the Ministry of Commerce to file an appeal in the Supreme Court against a Lahore High Court decision that granted gas/RLNG tariff concessions to Ghani Glass Ltd, noting that energy concessions for export sectors had already been withdrawn and were no longer in effect for any industry. In skills development, the ECC approved a Rs1 billion government guarantee for the Pakistan Skill Impact Bond (PSIB) to support outcomes-based vocational training programmes. The committee advised the ministry to transition towards public-private partnerships and reduce reliance on sovereign guarantees. The Ministry of Industries and Production briefed the ECC on trends in the vegetable ghee and oil market. Although national stocks are reportedly sufficient, the committee expressed concern over the slow pass-through of declining global prices to domestic consumers. Also Read: Dar seeks 'stable relationship' with US in first meeting with Rubio It urged close coordination with the Competition Commission of Pakistan, National Price Monitoring Committee (NPMC), and provincial authorities to prevent potential cartelization. In the telecom sector, the ECC approved a proposal by the Ministry of IT and Telecommunication to revise charges for Radio-Based Services (RBS). It directed regular revisions of these charges every three to five years in line with economic shifts and technological advancements. The meeting, which was also attended by Power Minister Sardar Awais Leghari, Petroleum Minister Ali Pervaiz Malik, and Commerce Minister Jam Kamal Khan, also approved a revised advisory committee for the release of IMT spectrum, critical for improving broadband access. Finally, the ECC approved the formal recognition of shipbreaking and recycling as an industry, as proposed by the Ministry of Maritime Affairs. The committee instructed the ministry to share sector power consumption data with the Power Division to assess the impact of applying industrial instead of commercial power tariffs.
Express Tribune
21-07-2025
- Business
- Express Tribune
NA panel orders sugar price probe
The National Assembly Standing Committee on Commerce met Monday at Parliament House under the chairmanship of MNA Muhammad Jawed Hanif Khan. It adopted a sub-committee report on long-outstanding receivables of the Trading Corporation of Pakistan (TCP) and was informed that Rs15 billion had been released via the Ministry of Commerce to aid TCP's recovery. Addressing SRO 760's suspension and the Gems and Jewellery Association, the Committee appreciated the ministry's active efforts and noted assurances of swift resolution. In view of rising sugar prices and the government's decision to import sugar, Hanif expressed concern over profiteering and consumer vulnerability. A sub-committee was formed to investigate and report within 15 days. The Committee discussed Pakistan's National Tariff Policy and questioned the rationale for lower taxes on large cars and higher on small vehicles. It also supported liberalising imports of raw materials and machinery to aid industry.
Express Tribune
16-07-2025
- Business
- Express Tribune
Govt, UK lawmakers discuss diaspora-driven investment
Listen to article Federal Minister for Commerce Jam Kamal Khan met with members of the All-Party Parliamentary Group (APPG) on Pakistan at the House of Commons on Tuesday. According to an official statement, the meeting focused on strengthening bilateral economic ties, enhancing parliamentary cooperation, and tapping into the potential of the 1.7 million-strong British Pakistani diaspora to boost trade and investment. The minister briefed APPG members on Pakistan's recent economic reforms aimed at promoting macroeconomic stability and inclusive growth. He highlighted key initiatives such as tariff rationalisation under the National Tariff Policy, the launch of the Pakistan Single Window to facilitate trade, and the development of Special Economic Zones offering incentives to foreign investors. The two sides also discussed collaboration opportunities in green technologies, renewable energy, and Pakistan's growing IT sector. These areas were identified as key to positioning Pakistan as a competitive hub for UK firms seeking to diversify their supply chains. Minister Jam Kamal emphasised the diaspora's role in connecting both nations and urged continued parliamentary engagement and private sector cooperation to maintain momentum following the UK-Pakistan Trade Dialogue Mechanism signed earlier that day. The meeting reaffirmed a joint commitment to sustainable partnerships for mutual prosperity. Later in the day, the commerce minister also met Mohammad Yasin MP, the UK Prime Minister's Trade Envoy to Pakistan, at the House of Commons. Pakistan's High Commissioner to the UK, Dr Mohammad Faisal, also attended the meeting. The minister congratulated Yasin on his appointment and appreciated his successful visit to Pakistan in June 2025, which helped lay the foundation for stronger economic cooperation. Both sides agreed on the need to deepen trade and investment ties by leveraging historical connections and the recently launched UK-Pakistan Trade and Investment Dialogue. Jam Kamal underscored the importance of the Dialogue in tackling market access issues, promoting investment, and increasing trade under the UK's Developing Countries Trading Scheme (DCTS). The minister also welcomed the formation of the UK-Pakistan Business Advisory Council (UKPBAC) and urged better coordination between diaspora entrepreneurs and chambers of commerce. Opportunities for collaboration were noted in key sectors including renewable energy, ICT, agriculture, and higher education. Both sides committed to boosting parliamentary links and exploring regular exchanges to advance political and economic relations.
