Latest news with #Rs281
Business Recorder
20-05-2025
- Business
- Business Recorder
Pakistan's tax-to-GDP ratio declines in FY2024–25, says think tank
ISLAMABAD: An economic thinktank has claimed that the tax-to-gross domestic product (GDP) ratio of the Federal Board of Revenue (FBR) has declined from 11.6 percent in 2019–20 to 10.4 percent in 2024–25. According to a report - Decoding Pakistan's Budget Dynamics - issued by Economic Policy and Business Development on Monday, the 15–year period shows a significant increase in nominal GDP, with the most dramatic acceleration occurring in the 2019-20 to 2024–25 period. The tax-to-GDP ratio shows a modest improvement through 2019–20 but declined by 2020–25, highlighting persistent challenges in revenue mobilisation despite repeated reform efforts. In 2019–20, the tax-to-GDP ratio remained 13.2 percent, the report said. The revenue composition shows differential growth rates across the 15-year period. Tax revenues grew steadily through fiscal year 2009–10 to 2019–20 and accelerated in the 2019–20 to 2024–25 period. Direct taxes grew faster than indirect taxes over the full period, indicating a gradual shift toward income–based taxation. Non-tax revenue grew modestly from 2019–20 to 2024–25 but surged dramatically in the following five years, growing at an implied annual rate of over 40 per cent between2019–20 to 2024–25 period. Tax component analysis revealed that all major tax heads grew significantly over the 15-year period. Customs duties saw particularly rapid growth from 2014–15 to 2019–20, growing from Rs281 billion to Rs1,000 billion. The petroleum levy, while growing modestly in the earlier periods, accelerated extraordinarily in the 2019–20 to 2024–25 period, becoming a major revenue source by 2024–25. Income tax is the largest contributor to tax revenues, amounting to Rs5,454 billion in 2024–25. Provincial share in federal revenues increased substantially over the 15-year period, growing at an average annual rate of 17.7 per cent, exceeding the growth rate of the overall budget. As a percentage of gross revenue, provincial share increased from 32.6 per cent in 2009–10 to a peak of 48.5 per cent in 2019–20, before moderating to 41.8 per cent by 2024–25. The increase from 2009–10 to 2014–15 reflects the impact of the 7th NFC Award, which raised the provincial share of the divisible pool from 43.75 per cent to 57.5 per cent. The report concluded that despite tax revenues growing by 768 percent, the tax-to-GDP ratio remained largely stagnant around 10–11 per cent. The increasing reliance on SBP profits (1,567 per cent growth) indicates dangerous dependence on central bank financing rather than sustainable tax measures, it added. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
Tax-to-GDP ratio declines in FY2024–25, says think tank
ISLAMABAD: An economic thinktank has claimed that the tax-to-gross domestic product (GDP) ratio of the Federal Board of Revenue (FBR) has declined from 11.6 percent in 2019–20 to 10.4 percent in 2024–25. According to a report - Decoding Pakistan's Budget Dynamics - issued by Economic Policy and Business Development on Monday, the 15–year period shows a significant increase in nominal GDP, with the most dramatic acceleration occurring in the 2019-20 to 2024–25 period. The tax-to-GDP ratio shows a modest improvement through 2019–20 but declined by 2020–25, highlighting persistent challenges in revenue mobilisation despite repeated reform efforts. In 2019–20, the tax-to-GDP ratio remained 13.2 percent, the report said. The revenue composition shows differential growth rates across the 15-year period. Tax revenues grew steadily through fiscal year 2009–10 to 2019–20 and accelerated in the 2019–20 to 2024–25 period. Direct taxes grew faster than indirect taxes over the full period, indicating a gradual shift toward income–based taxation. Non-tax revenue grew modestly from 2019–20 to 2024–25 but surged dramatically in the following five years, growing at an implied annual rate of over 40 per cent between2019–20 to 2024–25 period. Tax component analysis revealed that all major tax heads grew significantly over the 15-year period. Customs duties saw particularly rapid growth from 2014–15 to 2019–20, growing from Rs281 billion to Rs1,000 billion. The petroleum levy, while growing modestly in the earlier periods, accelerated extraordinarily in the 2019–20 to 2024–25 period, becoming a major revenue source by 2024–25. Income tax is the largest contributor to tax revenues, amounting to Rs5,454 billion in 2024–25. Provincial share in federal revenues increased substantially over the 15-year period, growing at an average annual rate of 17.7 per cent, exceeding the growth rate of the overall budget. As a percentage of gross revenue, provincial share increased from 32.6 per cent in 2009–10 to a peak of 48.5 per cent in 2019–20, before moderating to 41.8 per cent by 2024–25. The increase from 2009–10 to 2014–15 reflects the impact of the 7th NFC Award, which raised the provincial share of the divisible pool from 43.75 per cent to 57.5 per cent. The report concluded that despite tax revenues growing by 768 percent, the tax-to-GDP ratio remained largely stagnant around 10–11 per cent. The increasing reliance on SBP profits (1,567 per cent growth) indicates dangerous dependence on central bank financing rather than sustainable tax measures, it added. Copyright Business Recorder, 2025
Business Recorder
07-05-2025
- Business
- Business Recorder
Indo-Pak tensions: overseas Pakistanis can mobilise $1bn monthly in emergencies, ECAP
Overseas Pakistanis have the capacity to provide up to $1 billion a month in emergency financing to Pakistan through exchange companies, offering a critical financial cushion in times of national crisis, said Malik Bostan, Chairman of the Exchange Companies Association of Pakistan (ECAP). Speaking at the Karachi Press Club on Wednesday, Bostan said the association has a swap system in place that allows the Pakistani diaspora to lend funds for a period of two years, with full repayment guaranteed by the government. 'We have a backup system ready to mobilize $1 billion a month, or $12 billion annually, from overseas Pakistanis if needed,' he told reporters. His statement comes at a time when nuclear-armed neighbours Pakistan and India are engaged in escalating skirmishes, with recent Indian attacks reportedly killing 26 and injuring 45 civilians across multiple locations. The chance of further escalation remains high, heightening concerns over regional stability and the country's economic resilience. Bostan recalled that a similar mechanism had helped Pakistan weather a severe financial crunch in 1994 when foreign exchange reserves had dropped to just $400 million. 'At that time, the exchange companies arranged $10 billion through the same swap system,' he said. He noted that he had offered to activate this financing channel again in early 2023, when Pakistan's reserves had dwindled to below $3 billion—barely enough to cover a month's imports. However, the then-government instead opted for a $3 billion short-term loan from the International Monetary Fund (IMF) in June 2023, followed by a long-term $7 billion facility signed in mid-2024. According to Bostan, around 15 million Pakistanis live abroad and collectively earn about $8 billion a month. 'They already send around $4 billion monthly as workers' remittances. The remaining $4 billion is retained overseas, which shows they have the potential to contribute even more if necessary,' he explained. In March 2025, workers' remittances hit a record high of $4.1 billion, bringing the total to $28 billion in the first nine months of FY24-25. Bostan said this figure could rise further if the government offers attractive investment options and instills greater confidence among expatriates. Despite recent tensions with India and a brief suspension of international flights, the rupee remained stable at around Rs281 against the US dollar in the interbank market, Bostan added. He said that currency dealers sold $10 million in the interbank market on Wednesday morning due to low demand for foreign currencies in the open market. He expected dollar inflows to pick up with the resumption of flights, as overseas Pakistanis returning home typically bring in foreign exchange. 'Exchange companies surrender $20–25 million daily to the interbank market, totaling around $425–450 million a month,' he noted. Bostan emphasized that overseas Pakistanis are not just a source of remittances but a financial lifeline in difficult times, urging the government to strengthen ties with the diaspora to ensure their potential can be fully leveraged during national emergencies. Tensions between Pakistan and India escalated sharply following a deadly April 22 attack in Pahalgam, Occupied Kashmir, which killed 26 people, most of them tourists. India blamed the assault on cross-border elements without offering evidence, a claim Pakistan strongly rejected, calling instead for an independent investigation. In the days since, both countries moved into a state of heightened alert. Pakistan reinforced its military presence along the border, anticipating a possible incursion. Meanwhile, the Indian leadership granted its armed forces 'operational freedom,' further inflaming fears of escalation. Despite backchannel diplomatic efforts to contain the fallout, tensions remained high.
