Government fixes tax regime till December 2021

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QUETTA,   (Parliament Times) :  The country’s economy would be ready to takeoff in the upcoming months due to various solid steps taken by the incumbent government under the leadership of Prime Minister Imran Khan.

The economy has recovered rapidly than projected by international institutions. The industrial sector had already started showing robust growth as effective measures helped spurring economic growth, decelerating inflation and at the same time preserving external balance.

Despite COVID-19 pandemic, the government was able to shield industries from being stalled with timely stimulus packages. The principal focus was on construction industry to boost economic activity with subsequent job creation. The Pakistani rupee has recently gained strength against US dollar with the reduction in trade deficit and current account deficit. IMF projected the growth of Pakistan’s economy to 1 pc in “World Economic Outlook Database, October 2020,” ended up revising it to 1.5 pc in January.

The timely measures taken against the Covid-19 pandemic in terms of fiscal stimulus, easing mobility restrictions, timely arrangement of vaccination, together with accommodative monetary policy allowed economic activities continuity in the difficult time.

The economic activities have bolstered large scale manufacturing and SMEs, besides substantially improving revenue collection, increase in remittances and surplus in current account balance. The large scale manufacturing has surpassed its pre-COVID level of production in Jan FY 2021, witnessing 9.1 percent growth on YoY basis (-5.7) percent in Jan FY 2020). Tractor Production and sales had increased by 52.9 % and 52.6 % during July-Feb, 2020-21.

Impetus has been given to export oriented industries by fixing power price at $ 0.07/unit and gas tariff at $0.065/mmbtu. Banks have increased construction sector loans to five percent of their total portfolio by Dec 2021. Under National Poverty Graduation Program, 42,400 livelihood productive assets have been transferred to the ultra poor till Feb 28, 2021.

Some 1,043 Foreign Exchange Remittances Cards (FERC) of five categories (Silver, Silver Plus, Gold, Gold Plus, and Platinum) had been issued against foreign remittances of US$ 43,754,224. During July-Jan, 2021 the bank disbursed agriculture credit to Rs.715.6 billion compared to 702.9 billion during their same period last year.

Government has extended tax amnesty till June 2021 and fixed tax regime till Dec 2021. Irrigation water supply during February 2021 was 4.64 MAF against last year supply of 4.58 MAF. Exports increased by 4.4 percent to $ 16.3 billion during Jul-Feb 2021 as comparing to $ 15.6 billion during same period last year. The Textile sector exports had also increased by 6.7 percent during last year. Tax revenues grew by 6.0 percent to Rs. 2,915 billion during Jul-Dec FY 2021 (Rs. 2,750 billion last year.

Under Kamyab Jawan Youth Rs. 4,343 million has been disbursed till Jan 2021 to the youth for various businesses. During 1st July- March 5, 2021 the money supply increased by Rs. 962.4 billion as comparing to Rs 946 billion last year. The Consumer Price Index (CPI) inflation businesses decelerated to 5.7percent on YoY basis during the month of Jan 2021 after touching a high of over 14 percent last year.

Due to Made in Pakistan Policy business shift from consumer based to producer based – the primary balance posted a surplus of Rs 416 billion in the first half of FY 2021 as compared to Rs 153 billion last year. By keeping currency exchange rate on market base business competitiveness has increased. Pakistan’s total liquid foreign exchange reserves increased to $20 billion by the end of February 2021. The present level provides the import cover of almost around three months.

A total of 1,231,517 interest free loans amounting to Rs 43.17 billion have been disbursed to the borrowers under PPAF till Feb 2021.Pakistan Poverty Alleviation Fund (PPAF) through its 24 partner organizations has disbursed 39,783 interest free loans of Rs 1.2 billion during the month of Feb, 2021.

Market capitalization earned Rs 363 billion and settled at Rs 8,398 on January 29, 2021. During Jul-Feb -FY 2021, remittances rose to $ 18.7 billion ($ 15.1 billion last year), posting a (PPAF) growth of 24.1 percent. A significant increase has been registered in tax revenue, remittance, foreign exchange reserve reduction in trade, current account and fiscal deficit.

Ease of doing business index improved from 136 to 108. KSE 100Index crossed 46,000 index levels for the first time since April, 2018 and closed at 46,385 owned January 29, 2021.