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Is govt weighing new laws to crack whip on currency hoarders, tax violators?

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ISLAMABAD: The government has decided to turn up the legislative heat on the hoarders of foreign currencies — especially dollars — through penalties like heavy fines and imprisonment to discourage negative market forces from manipulating the exchange rate to their advantage, sources said Friday.

The new laws will be applicable to the exchange companies and the individuals found guilty of illegally stashing foreign currency in the country.

With few hours left to the unveiling of the budget 2023-24, sources told Geo News that the government was mulling raising the limit of the foreign currency allowed to be brought in from abroad up to $100,000 in a year. No questions would be asked regarding the source of the funds if the amount is less or equal to the aforementioned figure.

Currently, an amount of foreign currency equivalent to Rs5 million can be brought into the country without raising any flags.

The sources said that a proposal to impose penalties on non-filers has also been submitted according to which a maximum of 25% fine will be slapped on violators.

Under Section 165 of the Tax Ordinance, an Rs2,000 fine will be imposed on all those who don’t file their withholding tax statement.

On the other hand, the tax defaulters will face an additional Rs200 per day fine.

The recent development is seen as a hurried regulatory response to the US dollar’s record-breaking surge, reaching an unprecedented level of over Rs300.

The government has spun into action to put brakes on the “undesirable” outflow of foreign currency from Pakistan and promote transparency in foreign currency transactions conducted by exchange companies.

Amidst negotiations to revive a $6.7 billion bailout programme with the International Monetary Fund (IMF), Pakistan is not expected to devalue its currency further, as the pressure on the rupee has subsided, Bloomberg quoted Fitch Ratings as saying.

“We currently do not expect a large further devaluation of the Pakistan rupee,” Krisjanis Krustins, a Hong Kong-based director at Fitch, said in an emailed response to questions Friday.

“Although the currency has been very stable over the past few months, pressure on the reserves of the State Bank of Pakistan has also been contained, which suggests minimal interventions to support the currency,” Krustins said.

The IMF has stated that it is collaborating with Pakistani authorities to address concerns related to the country’s currency market and other matters before resuming the ongoing bailout programme, which is scheduled to conclude this month.

Following a currency devaluation in January, the rupee has depreciated by over 20% this year, rendering it one of the weakest performers globally.

The nation’s dollar stockpile has remained stable at about $4 billion since late February, after falling more than 50% in the past 12 months. Funds will be crucial to prop up the economy beset by supply shortages and avert a sovereign default, with billions of dollars of debt payments approaching.

“We continue to assume that the IMF and Pakistan will conclude the ongoing programme review, likely after the IMF has clarity on the upcoming budget,” Krustins said. “However, the window for this is rapidly closing, with the programme originally set to expire in June, and substantive progress unlikely in the immediate run up to elections due by October.”

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With its second-largest surge ever, PSX approaches 114,000 points.

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Driven by renewed activity from both private and government financial institutions, the Pakistan Stock Exchange (PSX) saw its second-largest rally in history on Monday.

The market regained many important levels in a single trading session as it rose with previously unheard-of momentum.

Intraday trading saw a top increase of 4,676 points, and the PSX’s benchmark KSE-100 Index gained 4,411 points to settle at 113,924 points. This impressive rebound demonstrated significant investor confidence by reestablishing the 100,000, 111,000, 112,000, and 113,000-point levels.

The market also saw the 114,000-point limit reestablished during the trading session.

The positive tendency was reflected when the market’s heavyweight shares touched its upper circuits. Among the most busiest trading sessions in recent memory, an astounding 85.78 billion shares worth a total of Rs55 billion were exchanged.

Experts credited the spike to heightened institutional investor activity and hope for macroeconomic recovery. Considered a major market recovery, the rally demonstrated the market’s tenacity and development potential.

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In interbank trade, the Pakistani rupee beats the US dollar.

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In the international exchange market, the US dollar has continued to weaken in relation to the Pakistani rupee.

The dollar fell to Rs278.10 from Rs278.17 at the beginning of interbank trading, according to currency dealers, a seven paisa loss.

In the meantime, there was a lot of turbulence in the stock market, but it recovered and moved into the positive zone. The KSE-100 index recovered momentum and reached 116,000 points after soaring 1,300 points.

Both currency and stock market swings, according to analysts, are a reflection of ongoing market adjustments and economic uncertainty.

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Phase II of CPEC: China-Pakistan Partnership Enters a New Era

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The cornerstone of economic cooperation between the two brothers and all-weather friends is still the China-Pakistan Economic Corridor, the initiative’s flagship project.

In contrast to reports of a slowdown, recent events indicate a renewed vigour and strategic emphasis on pushing the second phase of CPEC, known as CPEC Phase-2, according to the Ministry of Planning, Development, and Special Initiatives.

According to the statement, this crucial stage seeks to reshape the foundation of bilateral ties via increased cooperation, cutting-edge technology transfer, and revolutionary socioeconomic initiatives.

Planning Minister Ahsan Iqbal is leading Pakistan’s participation in a number of high-profile gatherings in China, such as the 3rd Forum on China-Indian Ocean Region Development Cooperation in Kunming and the High-Level Seminar on CPEC-2 in Beijing.

His involvement demonstrates Pakistan’s commitment to reviving CPEC, resolving outstanding concerns, and developing a strong phase-2 roadmap that considers both countries’ long-term prosperity.

At the core of these interactions is China’s steadfast determination to turn CPEC into a strategic alliance that promotes development, progress, and connectivity.

Instead of being marginalised, CPEC is developing into a multifaceted framework with five main thematic corridors: the Opening-Up/Regional Connectivity Corridor, the Innovation Corridor, the Green Corridor, the Growth Corridor, and the Livelihood-Enhancing Corridor.

With the help of projects like these, the two countries will fortify their partnership, and CPEC phase-2 will become a model of global economic integration and collaboration that benefits not just China and Pakistan but the entire region.

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