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

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1 year ago

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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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Business

Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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