Pakistan Daily Economy Update - 27 May

Transcription

1. May . 27, 2017 KCCI - eBulletin Over-optimism surrounds election-year budget The federal government has unveiled PKR 4,753Bn deficit budget for FY18, envisaging a huge spending in election year as well as an increase in pay and pension of military and civil government employees. Govt. is proposing PKR 401Bn for power sector development. The government has allocated PKR 118Bn to continue providing subsidy to those using electricity below 300 units/month. BR. PKR 4.75Tn development-heavy budget The budget for FY18 with a total outlay of PKR 4.75Tn, carrying a deficit of PKR 1.5Tn (4.1% of the GDP), focuses on infrastructure development, energy, agriculture and IT. The govt. has set an ambitious growth rate of 6%, which remained at 5.27% against a target of 5.7% during outgoing year FY17. The country has earmarked PKR 1Tn for PSDP, 25 % higher than last-year’s allocation. The major expenditures include PKR 1.36Tn for interest payment, PKR 248Bn for pensions, PKR 920Bn for defense, PKR 430Bn on grants and transfers and PKR 139Bn for subsidies. BR. Revenue target for coming year increased to PKR 4,713Bn Revenues collected by govt. from internal resources as well as privatization proceeds have declined in FY17, but loans and grants from foreign resources have registered an increase. Despite the decline in revenue collection in FY17, the collection target has been increased to PKR 4,713Bn in the FY18. Collections from internal resources has been enhanced to PKR 3,913.9Bn. While the income tax collection in FY17 fell to PKR 1,363.8Bn against a target of PKR 1,538.75Bn, its target for FY18 has been fixed at PKR 1,577.5Bn. Dawn. PKR 120Bn new taxation measures The govt. has introduced taxation measures worth PKR 120Bn in the annual budget to achieve the mammoth tax collection target of PKR 4.01Bn in FY18 as against the revised target of PKR 3.5Bn of FY17 with growth of 12.1%, while, given taxation relief of only PKR 32Bn for the upcoming year. It. has taken additional revenues generation measures of PKR 47Bn in income taxes and PKR 52Bn in general sales tax and PKR 1.5Bn in customs duty. It has enhanced withholding taxes on non-filers, which would generate PKR 8.25Bn. Moreover, regulatory duty has been increased on 565 non-essential items by various rates ranging from 5% to 15% The items included electronics, food, beverages, cosmetics, chocolates and footwear. The Nation. It’s a balanced budget, says industry The trade and industry has described the next year’s budget as ‘balanced’, but expressed concerns over the FBR collection target which has been increased by PKR 500Bn to PKR 4.01Tn. It welcomed the proposal to bring builders and developers under the normal tax regime. Business leaders made it clear that it was too early to grasp the true picture of the budget, and that they needed time to go through the documents. Dawn. Opposition rejects budget Opposition parties have rejected the federal budget for FY18, terming it a jugglery of words, traditional, reflective of status quo and failure of the government to provide relief to ordinary citizens. They have criticized the budget saying that the country's almost 40% population is dependent on the agriculture sector, but the govt. has offered only a few cosmetic incentives to it. They further said that govt. has failed to bridge the trade and current account deficits. BR. 2% “further: ST” levied on zero-rated supplies Finance Bill 2017 has introduced a new revenue generation measure of imposing 2% ''further sales tax'' on zero-rated supplies to unregistered persons by seeking an amendment to section 4 of the Sales Tax Act, 1990. The measure has introduced in order to exclude the scope of zero rating from application of further sales tax in terms of section 3(1)A of the S.T.A. 1990. BR. Supplies: GST withholding proposed to be withdrawn FBR has withdrawn provision of sales tax withholding on supplies from registered persons to other registered persons under the Finance Bill 2017-18, with the exception of advertisement services. BR. Provinces to get PKR 2.38Tn in new fiscal The provinces will get PKR 2.38Tn in FY18 from their share in federal revenues, showing an increase of about around 12.4% from FY17. The net revenue of the federal govt. is estimated at PKR 2.92Tn in 2017-18 as compared to revised estimates of PKR 2.61Tn. The News. Agri, poultry sector get many relief measures in budget The federal govt. has announced many relief measures for the agricultural and poultry farming sector. In budget 2017-18, elimination of 5% regulatory duty and reduction in custom duty from 11% to 3% on import of ‘grand stock’ and ‘parent stock’ of chicken. The govt. has also proposed reduction in custom duty on import of ‘hatching eggs’ from 11% to 3%. The govt. was also making efforts for promoting machine farming sector so that agricultural production could be enhanced. Budget has proposed doing away with 3% custom duty on import of upto 5year old and used harvesters while continuing the same facility for new combined harvesters. The News. GST on fertilizers, poultry, machinery, and hybrid cars reduced The govt. has reduced sales tax on fertilizers, poultry machinery, import and supply of hybrid electric vehicles. It granted sales tax exemption on agriculture diesel engine/imported seeds for sowing, premixes to fight growth stunting, items for renewable sources of energy/conservation of energy and multimedia projectors and exemption from 2% extra tax to lubricating oil. The rate of withholding income tax for mobile phone subscribers has reduced from 14% to 12.5%. In order to protect local industry, govt. has imposed 5% RD on import of synthetic filament yarn. BR. PKR 320Bn allocated for roads, PKR 42.6Bn for railways The federal govt. has allocated PKR 320Bn for developing the road infrastructure, PKR 42.9Bn to railway sector and PKR 13Bn have been earmarked for the Karachi Greenline project. The railway would initiate 6 new development projects during FY18 for which an allocation of PKR 9.3Bn has been earmarked out of the total uplift funds provided to this sector. The News. Economic Indicators List of Indicators Date / Period Unit Value Change Daily Crude (JU'17) Gold (JU'17) Gold (10g) Local Silver (JU'17) Cotton(KHI)-40 kg Kibor-6M 26-May 26-May 26-May 26-May 25-May 25-May 26-May 25-May 26-May 26-May PKR PKR Pts. $ Mn $/bbl $/oz PKR $/oz PKR % 104.86 106.35 52,637 -6.26 48.65 1,255.2 42,857 17.11 7,272 6.15% Forex Reserves 19-May $ Bn 21.01 -0.01% 0.00% -0.44% NM** -5.13% -0.24% 0.20% -0.35% 0.00% 0.00% WoW 1.59% YoY -2.79% -2.29% 19.88% -40.12% -204.75% USD-Interbank USD-Open MKT KSE-100 index FIPI Jul-Apr 17 Remittances $ Bn 15.60 Jul-Apr 17 Exports* $ Bn 16.92 Jul-Apr 17 Imports* $ Bn 43.47 Jul-Apr 17 Trade Balance* $ Bn -26.56 Jul-Apr 17 Current Account $ Mn -7,247 % 4.09 Avg. CPI-FY17* Jul-Apr 17 May-17 Discount Rate % 5.75 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful WoW= week on week; YoY=Year on Year Major Currencies 175 165 155 145 135 125 115 105 95 85 75 May-16 GBP, 26-May-17, 134.9 EUR, 26-May-17, 117.4 USD, 26-May-17, 104.9 Aug-16 USD GBP Nov-16 EUR Feb-17 May-17 Source: KCCI Research ; Oanda.com Quote of the Day “An economy hampered by restrictive tax rates will never produce enough revenue to balance our budget, just as it will never produce enough jobs or enough profits” John Fitzgerald Chart of the Day Federal Budget Expenditure FY18 (PKR Bn) PSDP, 1001, 21.06% 1363, 28.68% FBR proposes 10%, 12.5% and 15% slabs for tax The Finance Bill 2017-18 has proposed that where profit on debt does not exceed PKR 5Mn the proposed rate will be standing at 10%. Where, profit on debt exceeds PKR 5Mn but does not exceed PKR 25Mn, the proposed tax rate will be 12.5%. Where profit on debt exceeds PKR 25Mn the proposed rate will be standing at 15% in FY18. The News. FBR: Finance Bill introduces new department Finance Bill 2017 has introduced a new department in the FBR i.e. Directorate-General of Broadening of Tax Base for increasing the number of return filers in the country. The separate directorate is to work on broadening of tax base on the basis of data base. At the moment there are special zones in Regions who are assigned with this job. BR. Pakistan to launch state-of-the-art e-payment gateway Finance Minister Ishaq Dar has announced that Pakistan would open international electronic payment gateway ahead of the likely arrival of PayPal and Alipay in the country. The PKR 200Mn investment is being undertaken by the SBP and the system will facilitate transactions through mobile banking. Tribune. President’s salary increased to PKR 1.6Mn The govt. has increased salary of the President from PKR 1Mn to PKR 1.6Mn in the federal budget for FY18 with an increase in total budget for Presidency from PKR 942Mn in FY17 to PKR 959Mn for FY18. BR. Income of all political parties exempted The govt. has announced exemption on income of all political parties registered with the Election Commission of Pakistan (ECP) as at present there is no specific exemption in the law in respect of such income. BR. OtherDevelopment, 1193.9, 25.12% Defence, 920.2, 19.36% GDP Growth (%) Other-Current, 274.8, 5.78% Source: KCCI Research, MoF Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk