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Business Recorder
4 hours ago
- Business
- Business Recorder
Pakistan-IMF talks on tax-free sugar import underway
ISLAMABAD: Finance Secretary Imdadullah Bosal said on Wednesday that negotiations are underway between the government and the International Monetary Fund (IMF) on the issue of exemption of duties and taxes on the import of sugar. During the meeting of the National Assembly Standing Committee on Finance held on Wednesday, the Ministry of Finance secretary stated that one of the structural benchmark agreed between the fund and the government is not to grant tax exemptions/amnesty schemes. 'We are in consultation with the IMF regarding tax exemption on sugar,' he added. TCP cuts volume sought in sugar tender to 50,000MT The committee members also raised questions that whether additional revenue measures would be taken in case of tax exemption on sugar imports. The Federal Board of Revenue (FBR) has exempted Customs duty on the import of 500,000 metric tons of sugar and also reduced sales tax rate from 18 percent to 0.25 percent and withholding tax up to 0.25 percent on the import of commodity by the Trading Corporation of Pakistan (TCP) or the private sector. The FBR has also exempted three percent minimum value-added tax (VAT) on the import of sugar having quantity of 500,000 metric tons. FBR Chairman Rashid Mahmood Langrial informed the committee that the FBR has not moved any summary to the federal cabinet for exemption of duties and taxes on the import of sugar. The federal cabinet has taken the decision on a summary moved by the Ministry of National Food Security and Research (MNFSR). The FBR has issued the exemption notifications after receiving decision of the Federal Cabinet, Langrial stated. The FBR chairman stated that there are 54 percent taxes imposed on sugar including 20 percent import duty. There should not be such a high import tariff on the commodity. The prices of sugar at one time came down to Rs 130 per kg, he said. The Chairman of the Finance Committee, Naveed Qamar, was of the view that there is no shortage of sugar in the country. There are sufficient stocks of the commodity in the country. It is not clear what would be the rationale behind the import of sugar in the presence of ample stocks. The government should only be worried about the price of wheat which is de-regulated, but sugar is regulated in the country. Copyright Business Recorder, 2025
Arab News
5 hours ago
- Business
- Arab News
Pakistan sees $16 million in online animal sales during Eid — central bank
KARACHI: Pakistanis spent more than 4.7 billion rupees (approximately $16.3 million) on sacrificial animals through digital transactions during Eid-ul-Azha this year, the State Bank of Pakistan (SBP) said on Tuesday, highlighting a growing shift toward cashless commerce in one of the country's most traditional and informal markets. The digital sales were part of the central bank's 'Go Cashless in Cattle Markets Campaign 2025,' launched to promote financial inclusion and reduce cash handling during the three-day religious festival that began on June 7. The annual holiday, also known as Eid Al-Adha, marks the Islamic ritual of animal sacrifice, during which millions of Pakistanis buy goats, cows, and camels, often in large, informal marketplaces. The SBP said the campaign was implemented in collaboration with 24 commercial banks and covered 54 major cattle markets across the country. 'The campaign was successfully implemented in 54 major cattle markets across Pakistan, resulting in 64,553 transactions valued at Rs 4.656 billion,' the central bank said in a statement. Eid-related animal trade represents a significant part of Pakistan's informal economy. By introducing digital payment options in livestock markets, the central bank aims to improve financial transparency and support the government's broader goal of documenting the cash-based economy. Pakistan is currently under a $7 billion loan program with the International Monetary Fund (IMF), which encourages reforms including digitization of financial services to boost tax collection and economic stability. 'Digital payment systems play a vital role in modern economies by offering transparency, reducing fraud risks, and providing secure, convenient, and inclusive access to financial services,' the SBP said. It added that such initiatives were crucial for building trust and driving adoption of digital platforms, especially among underserved groups like livestock traders. The central bank said feedback from buyers and sellers in the cattle markets was positive, with participants appreciating the reduced reliance on physical cash. 'This campaign was highly appreciated by the buyers and sellers in the cattle markets, as it reduced their reliance on cash,' the bank noted. Najeeb Ahmed Warsi, head of online trading at Foundation Securities Ltd, called the initiative a meaningful step toward modernizing Pakistan's financial landscape. 'This campaign is more than just numbers, it's a clear step forward in Pakistan's journey toward a digitally-driven, cashless economy,' he said. 'By digitizing traditional markets, we're building trust, increasing financial inclusion, and setting the stage for a safer, smarter financial ecosystem.' Warsi noted that the partnership between 24 commercial banks and the central bank allowed the initiative to scale effectively across the country. 'This groundbreaking initiative earned widespread praise from both buyers and sellers, who welcomed the shift from cash to digital payments, and transparency during one of the busiest market seasons,' he added. The SBP said it would continue fostering collaborations across the financial sector to further Pakistan's transition to a digitally inclusive economy.
Express Tribune
7 hours ago
- Business
- Express Tribune
Rupee slips 29 paisa amid import pressure
Listen to article After a brief pause, the Pakistani rupee continued its decline against the US dollar on Wednesday, falling by 0.10% in the inter-bank market amid increasing import payments, profit repatriation by multinational companies, and a cautious sentiment ahead of upcoming external debt repayments. The currency closed at 284.96, marking a depreciation of 29 paisa from Tuesday's closing rate of 284.67. This resumption of the downward trajectory follows a marginal appreciation of the rupee against the US dollar on Tuesday, when it gained 0.02%. By the end of the trading session, the rupee had closed at 284.67, up by five paisa from the previous day's close at 284.72. "The Pakistani rupee weakness stems from persistent demand for the dollar amid rising import payments, profit repatriation by multinationals, and cautious sentiment ahead of upcoming external debt repayments," said Arif Habib Ltd Deputy Head of Trading Ali Najib. In addition, the SBP is also consistently buying the US dollar from the market, taking its intervention to over $6 billion in 8MFY25, a deliberate strategy to rebuild forex reserves, driven by strong remittances, IMF funding, and debt rollover considerations, he added. Despite improving forex reserves, speculative activity and global dollar strength continue to weigh on the rupee, he said. Without stronger inflows or policy tightening, the currency is likely to face further mild depreciation in the short term. Globally, the US dollar strengthened on Wednesday alongside rising Treasury yields. The uptick followed fresh US inflation data, which suggested that President Donald Trump's renewed tariff measures may be beginning to filter into consumer prices, further pressuring currencies like the Japanese yen. Gold prices in Pakistan declined on Wednesday, in contrast to the international market, where bullion rose on the back of escalating tensions in the Middle East, tariff uncertainty, and weaker US producer price data. According to the All Pakistan Sarafa Gems and Jewellers Association, the price of gold fell by Rs3,000 per tola, settling at Rs356,000. Similarly, the rate for 10 grams dropped by Rs2,572 to Rs305,212. This follows Tuesday's decline of Rs700 per tola, when the price had closed at Rs359,000. Interactive Commodities Director Adnan Agar said the recent resurgence in global prices was tied to the revival of tariff concerns linked to Trump's trade stance. "The Trump tariff issue has resurfaced. Because of that, the market is likely to remain in this range." Agar identified strong support at $3,300, suggesting the market could range between $3,380 and $3,420 in the near term unless fresh developments alter the outlook. Globally, spot gold rose 0.2% to $3,328.14 per ounce, as of 0937 am EDT (1337 GMT). US gold futures edged 0.1% lower to $3,333.60, according to Reuters.
Express Tribune
7 hours ago
- Business
- Express Tribune
Govt signs fresh sugar export deal
Listen to article The finance ministry on Wednesday finally admitted that the International Monetary Fund (IMF) objected to Pakistan's tax exemptions on sugar imports. Despite this, the government has entered into yet another agreement with the Pakistan Sugar Mills Association (PSMA), allowing future sugar exports if total stocks exceed seven million metric tonnes. The new agreement, signed on July 14 between the minister for national food security and research and the all-powerful PSMA, aims to persuade millers to keep ex-factory sugar prices between Rs165 and Rs171 per kilogram until October 15. It signals that the government has not learnt from its earlier decision to allow the export of 765,000 metric tonnes, which triggered the current price crisis. Prime Minister Shehbaz Sharif's government had permitted the export of 765,000 metric tonnes, driving local prices up to Rs200 per kg. In order to stabilise prices, the government allowed tax-free imports of sugar, prompting sharp criticism from the IMF. "The government is discussing the sugar issue with the IMF," said Secretary Finance Imdadullah Bosal at a National Assembly Standing Committee on Finance meeting held Wednesday. PPP's Syed Naveed Qamar chaired the committee also said that the IMF was displeased with the government's decision to waive taxes on the import of sugar. "There are about 70 benchmarks in the IMF programme, and one of those is that tax exemptions cannot be given," Bosal explained, responding to a question on the nature of the IMF objections. Sources said that the IMF has plainly asked the government to revoke three statutory regulatory orders issued to waive taxes. The Express Tribune reported on Tuesday that the IMF had reacted to the major breach of the $7 billion programme and conveyed its reservations about import of sugar by waiving taxes in violation of written commitments. Federal Board of Revenue (FBR) Chairman Rashid Langrial justified the tax waiver by pointing out that total import duties on sugar amounted to 53%, making imports unaffordable. The waiver aimed to cut the import price of sugar by Rs82 per kg. Initially, the Trading Corporation of Pakistan (TCP) issued a tender to import 300,000 metric tonnes. After IMF's objections, the volume was reduced to 50,000 tonnes, and the bid deadline was extended from July 18 to July 22. MNA Jawed Hanif criticised the double standard, saying the government used the IMF as an excuse during budget debates but later breached the agreement itself. Bosal denied speculation that the IMF would demand new taxes on salaried individuals in exchange for sugar import waivers. PPP's Nafisa Shah remarked, "Vested interests are stronger than the IMF." The sugar export agreement states that "the federal government will allow, for export of sugar stocks exceeding seven million metric tonnes (carryover plus 2025-26 production), after 30 days of the closing of the crushing season 2025-26." This definition means even imported sugar, if not consumed, could count toward total stock. The stock verification will rely on FBR's track and trace system and be overseen by a four-member committee, one official each from the federal and provincial governments and two from PSMA. Critically, the agreement includes a price-fixing clause that contradicts Competition Commission of Pakistan (CCP) laws. It states, "The maximum ex-mill price of sugar will be fixed at Rs165 per kg on July 15, 2025, and increased by Rs2 per kg monthly until October 15, 2025." Before last year's sugar exports, ex-mill prices were below Rs140 per kg. By setting the maximum price at Rs171 per kg, excluding retail profit margins, the government is effectively granting a windfall to millers. Qamar said the government should exit the sugar trade entirely, including ending the licensing regime for new sugar mills. "There are sufficient stocks in the country," Qamar added. "Importing sugar sends the wrong signals to the market." He further said the government should only regulate wheat, not sugar. "Sugar remains a highly regulated commodity, while wheat has been deregulated," he said. Other matters The committee also reviewed two key private member bills: the Corporate Social Responsibility (CSR) Bill, moved by Nafisa Shah, and the Parliamentary Budget Oversight Bill, proposed by MNA Rana Iradat Sharif Khan. The CSR bill proposes that companies contribute 1% of net income toward social welfare. However, the secretary finance opposed the bill, claiming it would raise the cost of doing business. Committee members rejected this argument, noting the levy targets net income, not sales. Nafisa Shah argued that many companies already allocate around 1.5% to CSR voluntarily and support the bill. Despite this, the finance ministry requested a one-month consultation period with stakeholders, which the committee said was unnecessary. Qamar also formed a sub-committee to further evaluate the Parliamentary Budget Oversight Bill, aimed at enhancing budgetary accountability. While Secretary Bosal expressed reservations against the bill, Qamar stressed that while the oversight bill may challenge the bureaucracy's fiefdoms, the proposed legislation is important for the improvement of the overall system.
Express Tribune
7 hours ago
- Business
- Express Tribune
Govt poised to do away with cross-subsidies for gas
Listen to article The government is set to end cross-subsidy for domestic gas consumers and introduce a direct budgeted subsidy model by 2026, in line with the mechanism established for the Power Division. The federal government is locked in negotiations with the International Monetary Fund (IMF) under the Resilience and Sustainability Facility to replace cross-subsidies with direct subsidies commensurate with the consumer income levels under the Benazir Income Support Programme. In a recent meeting, the Petroleum Division informed the cabinet that they were engaged with the IMF and the new system was likely to be developed by 2026. It said that it had already hired advisory firm KPMG and a dedicated group had been formed to examine the replacement of cross-subsidies as part of efforts to revitalise the gas sector. It was revealed that residential consumers were benefitting from a cross-subsidy of over Rs150 billion, financed by imposing higher tariffs on captive power plants, industrial and commercial consumers. The Petroleum Division added that, as part of reforms agreed with the IMF, a levy had been imposed on the captive power plants. As a result, gas prices for them have increased, consumption has declined and the ability to cross-subsidise residential consumers has gone down. It was highlighted while discussing a court case in Balochistan relating to Sui Southern Gas Company (SSGC). SSGC receives around 111 million cubic feet per day (mmcfd) of gas from Balochistan fields (Sui and Zarghon), which is insufficient to meet winter demand from domestic consumers in the province, which peaks at 210 mmcfd. To make up for the deficit, SSGC diverts gas from its sources in Sindh, which in turn faces low pressure and load management in winter. SSGC claims that more than 26 billion cubic feet (bcf) – 59% of the total of 44 bcf supplied to Balochistan — was either stolen or illegally consumed by tampering with gas meters. The Petroleum Division said that, as reported, while SSGC's operations in Sindh recorded unaccounted-for-gas (UFG) losses of 9.5% during financial year 2022-23, the losses in Balochistan stood at a staggering 59.7%. The loss resulting from low or no recoveries in Balochistan was estimated at Rs22 billion. Despite persistently high UFG losses, SSGC continued to operate and invest in the area to support the government's socioeconomic development agenda and to comply with orders issued from time to time by the Balochistan High Court regarding maintenance of adequate supply pressure during winters. The Balochistan High Court restrained SSGC in May 2023 from charging more than Rs5,700 in monthly gas bills. It also constituted a commission for making recommendations on gas tariffs to be charged in the colder areas of Balochistan. The commission made the following domestic tariff recommendations: for summer, 200 cubic metres at Rs250 per million British thermal units (mmBtu), totaling Rs2,551 per month; and for winter, 590 cubic metres at Rs500 per mmBtu, totaling Rs8,848 per month. Over five months, the maximum amount payable would be Rs62,092. Consumption above 590 cubic metres would attract the non-protected category tariff of Rs5,174 per month. The Petroleum Division shared that the Balochistan High Court, through its order dated June 13, 2024, directed SSGC to implement the commission's recommendations with retrospective effect from November 2023, resulting in revenue losses. In accordance with the notified tariff effective from February 1, 2025 under Section 8(3) of the Ogra Ordinance, 2002, monthly charges for two slabs were worked out as under: For consumption up to 200 cubic meters, the notified rate is Rs4,200 per mmBtu, totaling Rs15,827, plus Rs2,000 in fixed charges, taking the total monthly bill to Rs17,827. For consumption above 400 cubic meters, the gas charges are Rs106,441 plus Rs2,000 in fixed charges, totalling Rs108,441. The Petroleum Division argued that the tariff structure recommended by the commission conflicted with the government's approved tariff, causing revenue losses. It was further outlined that the Balochistan High Court's order was challenged by SSGC in the Supreme Court. The apex court, through its order dated October 24, 2024, directed the Oil and Gas Regulatory Authority (Ogra) to thoroughly review the commission's report and finalise recommendations through hearings and consultations with all relevant parties. The cabinet was informed that Ogra held a hearing on November 11, 2024 and issued its findings on November 22. In its report, Ogra emphasised that commission members could not cite any statutory provision for recommending a special tariff for Balochistan consumers.
