Does not depict the forex indicators
In this regard, a number of clarifications were made. However, it is again submitted for their information that the data used to compute the GDP numbers is provided by a host of agencies, public and private as well as federal, provincial and local authorities. These data sources are fixed as approved by the National Accounts Committee. The data providers are the members of the National Accounts Committee meeting and verify the data provided by them. The data available for nine months, and in some cases for six months, is annualized and used. As far as the compilation of unemployment rate is concerned, it is worth mentioning that PBS has been following the internationally approved methodology over the years and no change in compilation procedures was carried out during the referred years. The writers have presented new unemployment rates for by including the discouraged workers which is not the internationally accepted methodology. The fact is that the writers, by including the discouraged workers only in and ignoring these workers inhave committed intellectual dishonesty. Had they done such an exercise, the unemployment rate for would have been on the same level as reported by PBS. Moreover, apart from repayments, current account deficits were also met persistently for the past 3 years while maintaining growth in foreign exchange reserves. The healthy foreign exchange reserves act as cash buffers while helping to boost investor confidence for economy. The issuance of Sovereign Sukuk Bond is a part of financing plan Budget and has no relevance with the end of IMF program and unsustainability of foreign exchange reserves as claimed in the news article. The writers have made many such false projections in the past such as economy slipping into deflation which does not materialized. Further, IMF being an independent institute and credit rating agencies in their recent reports acknowledged this fact that Pakistan external debt is on sustainable path and there is very little exposure to medium term vulnerabilities. In their reply they have claimed that the MoF only argued that the government is making serious efforts to address the issue on declining exports without providing any details of the measures that are currently being taken by the government. In this respect, it is important to clarify that measures to increase exports have not only been mentioned in response to various articles published earlier, but it has also been discussed and explained on number of forums. Above all at the time of budget announcement, Finance Minister in his budget speech has categorically described the measures for export promotion and is available on MoF web site. The government is taking serious efforts to address the issue of declining exports. It may be noted that there is muted economic growth across the globe. Our major share of exports goes to US, China and EU. However, the government is fully cognizant of this issue and taking a number of measures to increase exports. Strategic Trade Policy Framework STPF for export promotion is a welcome development which will enhance exports in future. With regard to the decline in non tax revenues, authors believe that the target for non-tax revenue is not going to be achieved this year. In this regard it is to explain that the receipts on account of CSF are budgeted as intimated by the concerned agencies. Such receipts are in fact reimbursements of actual expenditure relating to western borders operations. These are due payments and are projected to be received during current financial year. On the other hand growth in current expenditure has been considerably reduced which has become possible due to decrease in fiscal deficit and resultantly less domestic interest payments. Duringgrowth in current expenditure was 6 percent while in budget growth in current expenditure is projected at percent of GDP. According to the recent data, growth in total expenditure is contained at percent during the first quarter of FY against the growth of percent recorded in the same period of FY In terms of GDP, total expenditures stood at percent during first quarter of FY against percent in the same period of FY2016, while current expenditure recorded at percent as percent of GDP during Q1 of FY against percent of GDP in the same period of last year. The current expenditures have posted a negative growth of percent during Q1 of FY against the growth of percent registered in the same period of FY augur well that expenditures will be contained as per projections. Line losses have reduced to percent during FY from percent during FY and collection from consumers improved to percent during FY as compared to percent a year earlier. As a result of this improvement in operational performance, the power sector subsidies have rationalized to Rs billion during FY as indicated in Federal Budget for Subsidies are now targeted to the vulnerable segments of the society. As a result of better operational and financial management by the current government, the average shortfall has reduced to 2, from 2,900 MW that resulted in reduction of load shedding to hours a day. Current government inherited a huge stock of power holding loans of Rs billion, therefore, the contention that the circular debt must include the Power Holdings Private Limited PHPL loans is not correct as the payment of debt servicing of these loans is being made directly by the power sector distribution companies. In fact, current government is discharging the pending liabilities of previous governments. Power sector operates in a regulated environment and energy prices are also determined by power regulator NEPRA by keeping in view the revenue requirement of distribution companies Discos. Targets for line losses and collection are determined by NEPRA. Currently, all the Discos are in the process of filing the Multiyear Tariff Petitions. With regard to the FBR, authors have stated that there is a shortfall in FBR tax revenue during July-Octoberdecline in Income tax revenue through demand creation, share of Direct taxes in federal taxes is 35 percent and not 39 percent, effective rate of customs duty on imports has gone up from 6 percent to 9 percent and issue of Payment of Refunds. In this context, it is important to understand that FBR has collected Rs billion provisional collection during July-October FY as compared to Rs billion collected in the corresponding period last year. In absolute terms Rs. Comparing with the revenue target it is clarified that the collection trends during first few months remain low as compared to the second half of the year. It is expected that the collection will pick up in coming quarters more rapidly and the loss occurred in first few months would be compensated. However, there are various reasons for this decline. Major decline has been noticed in oil and gas sector with Rs. The sales tax rate on motor spirit in July, August and September were 17 percent, 20 percent and percent, respectively and were reduced to 17 percent in the first quarter of CFY. The price per litre of motor spirit was around Rs per litre in first quarter of as against price of Rs. Both these factors i. Rate of sales tax on high speed diesel was 29 percent, percent and 45 percent in July, August and Septemberrespectively as against rate of 28 percent, in CFY. Similarly, the price per litre was also higher in first quarter of as compared to resulting in reduced collection of sales tax. The sales tax collection on imports grew only by percent and less than expected growth of sales tax on imports is due to the zero-rating of the inputs of five export sectors and the substantial reduction in sales tax rate on Urea fertilizers. These steps were taken in the recent budget to boost exports and to support the agriculture sector but were bound to have adverse impact on FBR revenues. Moreover, revenue measures taken in the last budget will take some time to yield the desired yield and after the usual lag will offset the impact of the relief measures taken by the government for overall economic growth. The reason for the decline in income tax revenue through demand creation is that the field formations have been facing various problems. One major problem being the cases stuck at different levels of appellate fora. Once these issues are settled, the collection through demand creation would increase Authors claim that the share of direct taxes in federal taxes is 35 percent and not 39 percent is baseless as the data confirms that the share of direct taxes has increased from just 18 percent in to more than 39 percent in The present government has taken serious measures to increase the share of revenue from direct taxes to bring equity and fairness in the system and to encourage progressive taxation instead of regressive taxation. The concept of filers and non-filers was introduced in order to increase the number of filers in the country. The cost of business for non-filers has been increased in the recent years. Resultantly, the number of filers has also increased due to levy of higher withholding tax rates for non-filers. This differential treatment has not only been introduced in banking sector but also other depict like purchase of movable and immovable properties. With regard to the effective rate of customs duty on imports ,it has gone up from 6 percent to 9 percent, it is clarified that in the reforms process during the last three years, not only the maximum rate of Customs Duty has been brought down from 30 percent to 20 percent, the Customs Duty slabs have also been reduced from 7 to 4 i. The effective rate, which was percent inhas increased to percent in because of elimination of exemptions. During the last three years, besides drastic reduction in the exemption regime of other taxes, Customs Duty related exemptions; to the tune of Rs billion have been withdrawn. This has brought the share of duty free import in total import value from 62 percent in to merely 27 percent in These reforms measures have altered the rent seeking nature of selected sectors of the economy making them more competitive. In the budgetthe duty rate of more than two thousand items, mostly machinery and primary raw material, was reduced from 5 percent to 3 percent, extending benefit of more than Rs billion to the industry. Regulatory Duty has been imposed mainly on two types of goods, firstly some selected items of non-essential nature to reduce the trade deficit and protect precious foreign exchange and secondly to protect local industry in the wake of unusual fall in prices of certain goods in the international market. On the issue of payment of refunds it is important to mention that the FBR is trying to promote tax culture and taxpayer friendly environment in the country. Overall tax refund claims have declined. The net revenue collection during was Rs billion and the pending refund claims were percent of net collection. This percentage has declined during the last three years and the net collection as on 30th June was Rs billion whereas, the pending refund claims were percent of the net collection. FBR has cleared sales tax refund claims of Rs billion which have been electronically transferred to accounts of refund claimants. Earlier in August the refund claims of Rs. It is further clarified that current government inherited pending refund claims of Rs billion inbut is committed to clear all refund claims in minimum time. The second MTDS published in February is a continuation of the previous MTDS published in April While it incorporates the new economic realities such as new market conditions and the overall economic cycle yet it focuses on the same principles as laid out in the first MTDS. To reiterate, the guiding principle was lengthening of the maturity profile of domestic debt while making appropriate trade offs between the cost and risks. The indicators have improved during all four quarters of and are on track to achieve the targets set under MTDS. Thus, evaluating the debt risk indicators in isolation over the short term i. If all indicators are within defined sustainability ranges as also acknowledged by the news article, it is surprising to note that same news article is presenting conflicting statements that debt sustainability has worsened. In fact, the real economic growth has continuously gained momentum in last three years along with the contained inflation which is an ideal situation for developing countries like Pakistan. Encouragingly, GDP growth rate of Pakistan is higher during past few years as compared with the global GDP growth rate. The increase in contingent liabilities is related to improve the financial viability of projects or activities undertaken by the government entities with significant social and economic benefits. It allows public sector companies to borrow money at lower costs or on more indicators terms Finally, one must bear in mind that it is the present government and the team which took the bold step of formulating the MTDS and start publishing risk reports with the objective of enhancing transparency in these matters. This fact needs to be recognized and appreciated by all quarters rather than hurling undue criticism based on selective data set and questionable intent. The outstanding stock of circular debt stands at around Rs billion around 1 percent of GDP as of end Juneexcluding the liabilities of Power Holdings Private Limited PHPL Implementation of National Power Policy has pushed forward the structural reforms agenda in the power sector. The current government has rationalized the tariffs. The timely payment of tariff differential subsidy TDS is being ensured on a monthly basis. The gap between GoP notified tariff and NEPRA determined tariff has narrowed to Rs per unit in FY in comparison to Rs per unit in FYwhich has resulted in rationalization of untargeted subsidies. The FBR is trying to promote tax culture and taxpayer friendly environment in the country. Overall tax refund claims have declined The net revenue collection during was Rs billion and the pending refund claims were 9. This percentage has declined during the last three years and the net collection as on 30th June was Rs billion whereas, the pending refund claims were 6. On expiry of every five years term old NFC expires and a new NFC is constituted. However, the NFC award does not expires after 5 years, rather it remains in operation till announcement of new award Fiscal consolidation is a joint responsibility of the federation and provinces. To contain the fiscal deficit within the prescribed limits, the federal and provincial governments have to work in harmony To maintain cash surpluses was a mutual and agreed decision making between federation and provinces. The cash surplus maintained by the provinces with the State Bank of Pakistan belongs to them and they are free to utilize these funds. In addition, provinces are also entitled to get incentives grant on maintaining cash surpluses on quarterly basis Under the 18th Amendments the subjects of Education, Health and Housing stand fully devolved to Provinces. It is, therefore, responsibility of the provincial governments to make sufficient allocations for these sectors. FDI is expected to increase going forward as the progress on projects under CPEC gain further traction. Recent joining MSCI emerging market index reflects the signs of strength and stability of capital market. The government, through the State Bank of Pakistan has reduced its mark-up rate on Export Refinancing Facility EFR to percent from July till date. The article made misleading assertions about public debt and amendments in Fiscal Responsibility and Debt Limitation Act as per the following details: The above facts clearly establish the fallacious views and opinion mentioned in the news item regarding the state of public debt management in Pakistan. Rebuttal - Reference news item appeared in Daily Times on title "Government considers freezing foreign currency accounts" The news item titled "Government considers freezing foreign currency accounts" which appeared in the Daily Times on 29th September, comprises false statements and concoctions which have no ground. No such suggestions to ban foreign currency accounts in the country have been made to the Prime Minister by the Finance Minister. This news story is an attempt to malign the increasingly robust investment climate in the country. There is no proposal from any quarters to freeze foreign currency accounts in the country. There is no question of debt sustainability in the country and the newspaper has carried baseless and unverified reports without quoting any source which again shows irresponsible reporting. Rebuttal - Reference news article by Dr. Depict A Pasha published in Business Recorder on title "Budgetary Outcome in " An article by Dr. However, as per the author there are some negative developments i. SBP profits were also low due to low policy rate regime and lack of privatization receipts from does sector during the year. Further, receipts from oil sector were also low due to lower oil prices in the international market. Public Sector Development Program PSDP : It is clarified that no cut was imposed on PSDP both by the federal and provincial governments. As per trend, actual expenditures are always low as compared to budgeted estimates. The main reasons are limited spending capacity of the executing agencies, delay in take off of projects and procurement issues. The total PSDP spending during the year was Rs billion while spending for is at Rs billion i. In fact the present government has assigned top priority to development spending especially in view of execution of China Pakistan Economic Corridor CPEC project. This is only 20 bps of GDP. The revised OFD target in terms of GDP was 4. The higher OFD was entirely contributed by higher than expected expenditure at provincial level while federal government partly compensated it through savings in federal deficit, despite shortfall in non-tax revenue, by cutting current expenditures. It is even more amusing that on a number of previous occasions the author has been lamenting that fiscal adjustment has gone too far and that the Fund should be told to stop it. Yet here the very extent of the adjustment is being questioned. The internationally accepted definition of fiscal deficit calls for measuring the deficit through the financing rout. Figures relating to financing of budget deficit are real time and cash based. The difference between budget balances calculated from the book balance and the bank balance is recorded as statistical discrepancy. When the cash has not been expended, no effective deficit has been incurred. This Government has not invented this method. Besides, there is a cyclical pattern this statistical discrepancy follows. From its peak build up at the close of the fiscal year, it vanishes mostly in the first quarter. It is meaningless to add these numbers over the tenure of the Government and claim that the Government has taken advantage of such a cumulative discrepancy. This number is self-correcting as explained above. In andthe statistical discrepancy was a large as 1. It would be too early to assess the actual position for current financial year. Ishrat Hussain and Dr. Asad Zaman as members of the Board attended the subject meeting held on 9th September, as already mentioned in the press release which was published in leading newspapers. They fully participated in the discussion on each of the issue and where necessary, shared views for further improving the fiscal and monetary policies of the government. Broadly they appreciated the efforts of the government in stabilizing the economy However, the board members showed concern over falling exports. The meeting observed that competitiveness was one of the reasons in the decline. However, one of the private members proposed that government should come forward and mitigate the negative perception on economic stabilization program being created in media It is also for the information that the meeting discussed the same economic data Fiscal, Monetary and External account which is compiled either by the State Bank, PBS or FBR and is available on the websites of these organizations, therefore, there is no secret data considered in the meeting. Ministry of Finance strongly refutes the contents of the article which do not depict the correct picture of the conduct of business in the Federal Government or the facts relating to the decision of the Supreme Court. The factual position is as under: The news article has attributed things to Finance Minister which are completely unfounded and by misconstruing the ruling of the honorable Court. It must take into account that the real economic growth in Pakistan is gaining momentum and that too in a low inflationary environment, a combination which can hardly be questioned by economists. Furthermore, public spending in low interest rate environment is always beneficial as long as it is not crowding-out private sector credit which definitely is not happening in Pakistan. The present government has made remarkable gains in reducing debt burden of the country and improved the fiscal and debt sustainability indicators. Sajid Chaudhry, referring to the statement given by the Finance Minister at the CPEC Expo on 29th August The official spokesperson of the Finance Division would like to clarify that the statement has been quoted out of context. The Finance Minister was referring to the Will of the Almighty Allah that only He knows how long a person will live and what will be destined for him. The statement was not at all meant for any other thing. Official Spokesperson of the Finance Division categorically clarifies that no such phone call was made by the Finance Minister to the Indian Finance Minister. The invitations were given by the SAARC secretariat. All guests who participate the event will receive a warm welcome from Pakistan as it is the host country. Rebuttal - News report titled "Govt. In fact, the government has formalized the definition of public debt through the said amendments since Fiscal Responsibility and Debt Limitation Act previously had not defined public debt explicitly. It is worth mentioning that the public debt definition which the article is referring to has already been stated through various publications of the government including Debt Policy Statement, Medium Term Debt Management Strategy and Economic Survey of Pakistan. More importantly, there will be no impact in the public debt data as disseminated by the government in the past and going forward The article also mentions contracting of expensive foreign debt by the present government. It is to clarify that the average cost of the external loans obtained by present government comes to less than 3 percent which is significantly lower than the domestic financing cost even after one builds a margin of capital loss due to exchange rate depreciation. Thus cost of the external debt contracted by current government is not only economical but is also dominated by long term funding to free up cash flows in the near term The above facts clearly establish the fallacy of the views mentioned in the news item regarding the state of public debt management in Pakistan. The present government has made remarkable gains in improving the fiscal and debt risk indicators. Clarification - The editorial published in the Business Recorder, Islamabad dated "Government Claims and Counter Claims" An editorial on the subject has been published in the Business Recorder, Islamabad dated The Editor of the article has quoted Dr. The Editor mostly touched two issues i claim of Dr. Pasha regarding difference in figures of PSDP shared with IMF and presented the Parliament and; ii figures relating to Coalition Support Fund CSF. The Fund is fully aware of these budgetary estimates. Moreover, while negotiating the Fund program, government generally takes conservative estimates so that the commitments made by it are fully achieved. PSDP includes development allocations for both the federal and the provincial governments. The size of PSDP in mainly based on the estimates total revenue collections. However, due to the limitations on the spending capacity of the executing agencies, delay in takeoff of projects and procurement issues, etc. Development funding is not fully utilized in the currency of the financial year. It is for this reason that actual figures of PSDP spending shared with the IMF are lower than the budgetary allocations. IMF shows these figures under Grants while the government includes it are the PSDP. The budget estimates shown under defense receipts also include receipts. Ihtasham ul Haque article "Has IMF ruined Pak economy and its statistics? The writer should be mindful that IMF is an independent institution makes assessment of every member country separately based on thorough research and does not blindly follow the facts and figures provided to them. The principles and rules framed by IMF are applicable worldwide. The facts remains that ground realities are not changed though assumptions. It is also important to mention here that IMF does not force any country to take loan from it. Instead countries facing crisis approach the IMF. However, IMF extends loan on its own conditions which a member country is required to follow. It ensures that the member country will manage its external payments issue and thus be in a position to repay the Fund on time. Of these conditions some are performance criteria, which are particularly focused on reducing deficits. In addition, conditions may also include other important economic policy actions critical for stable macroeconomic conditions. Although IMF programs often regarded as controversial. Even then countries enter into IMF program because it may enable the government to adopt such policies that otherwise would have been difficult to pursue. It is important to specify here that as the IMF deals with forex crisis, whatever approach they offer; it is liable to challenges. It is unrealistic to manage a crisis without some terrible corrections. And in doing so, countries could lose their growth momentum in the short run. Similarly, other international financial institutes and foreign investors show their confidence into that economy which is in agreement with the IMF. Like in case of Pakistan, after entering into IMF program, different international economic institutes have reposed their confidence in the economy and showed their interest in financing various large projects in Pakistan. Sharp rise in international oil and food prices affected the macroeconomic situation in Pakistan. Inflation reached at the highest level of 25 percent in October Fiscal deficit increased to percent while current account balance also deteriorated. Foreign reserves sharply depleted. The suspension of the programme posed negative impact on the economy. Inflation had averaged around 12 percent. Circular debt of Rs billion was crippling the power sector and the economy. Investment to GDP ratio was declining continuously and had reached percent, tax to GDP ratio had declined to percent while projected fiscal deficit for was percent. The IBRD funding was stopped; World Bank and other international financial institutions closed the doors. International rating agencies downgraded its rating for Pakistan. Foreign exchange reserve dropped significantly. Soon after assuming the charge, the present government laid out comprehensive agenda of reforms to reinvigorate the economy, spur growth, maintain price stability and rebuild the key infrastructure of the economy through removal of bottlenecks like, energy shortages, bleedings PSEs and circular debt along with creating conducive investment climate to boost exports and tax revenues, and bridge fiscal and current account deficits. Pakistan entered into EFF program which is now being successfully completed. The present government initiated reforms on multiple dimensions with comprehensive execution plan for all sectors of the economy. All macroeconomic policies including monetary, fiscal and external sectors has been designed and co-ordinated to reinforce all sectors of the economy and created incentives for domestic and external resource mobilization on sustainable basis. As a result the economy has achieved macroeconomic stability, economy also succeeded in achieving higher economic growth with price stability along with declining unemployment in the forex. During FY GDP growth reached to percent which is accompanied by significant recovery in commodity producing and services sectors and is the highest growth achieved since The inflation has been contained to 46 year low level in FY ; the policy rate is 44 year low to allow more credit to private sector. The monetary expansion witnessed more than percent. The industrial sector growth is eight year high level. The tax to GDP ratio has increased from to percent. The fiscal deficit has been contained from percent expected to percent in FY The capital market is touching historical heights. The rating agencies have upgraded their rating for Pakistan. The development partners opened their windows. New investments are coming in. The reserves have reached to historical level. The CAD has been contained below the target. Economic growth is projected to continue its upward acceleration in coming years. The midterm budgetary framework has set timelines for achieving high growth rates gradually steering it over percent through various infrastructure projects including building of roads, rail networks, telecommunications, special economic zones, development of Gawadar Port and major projects for additional power and improvement in power transmission sub-sector. Government has pursued actively to resolve the energy crisis and succeeded in improving the situation for all consumers in the country. Economic policies of the government also remained successful in maintaining price stability and smooth supply of the commodities. The benefits of decline in international oil prices were also passed on to general public which is widely recognized as a relief to the common man. Due to investment and growth friendly policies of the government the economic situation continued improving and reflected in better movement in key economic indicators. The development budget has been gradually and adequately raised to meet the investment requirements. Against a revised estimates of Rs billion for federal PSDP during FYraised to Rs billion in FY2016, showing a cumulative increase of more than percent. Moreover, the Prime Minister youth scheme which is an umbrella program for the youth to involve them actively in economic activities along with skill development in youth as per requirements of labour markets. All these initiatives reflect that the government policy is the growth friendly with focus on job creation as well as welfare of common man. The author has cited the irrational and unrealistic arguments of Dr. Ashfaque Hassan Khan on Federal Board of Revenue, Pakistan Bureau of Statistics and Ministry of Finance regarding fudging of the statistics which does not carry any weight to repeat the same unrealistic arguments which have been refuted several time Response - Dr. Pasha has given a rejoinder published in daily "Business Forex dated 21st July, "IMF Eleventh Review" Dr. He has appreciated the valiant efforts of Economic Adviser which according to him he is not the part of government team which holds discussion with the IMF during reviews and he may have not full knowledge of views of IMF At the very outset it is for his information that Economic Adviser is a part of the government team which holds discussions with the IMF With regard to his observation on upward revision by the IMF of the GDP growth rate from percent to percent inthe writer has mentioned that economy has been unable to meet the major macroeconomic demand targets related to total investment and export respectively, and the IMF has failed to quantitatively indicate other factors which have may have compensated for the lack of realization of the two key targets and thereby led to a higher growth rate In absolute term the total investment increased by percent. Although export remained slow as per target. The exports not only declined in Pakistan but major economies also faced decline in exports on account of slower global economy. The government is taking all measures to enhance exports. This is a provisional number; it will be revised next year and will use full year LSM data. According to Atlantic Media Company AMC report Pakistan is rated among top emerging economies. Moreover, while negotiating the Fund program, the government generally takes conservative estimates so that the commitments made by it are fully achieved PSDP includes development allocations for both the federal and the provincial governments. The size of the PSDP is mainly based on the estimated total revenue collections. It is clarified that the amount of subsidies is paid after finalization of the claims which may require some time. Therefore, claims for the current financial year may be finalized at the end of year and could be paid during next financial year. However, government is committed to pay all the claims relating to agriculture package Pay and Pension: The author has raised the question relating to funds for increase in pay and pension. It is once again reiterated that the allocation for pay and pension is made on gross basis and any increase is being absorbed within that allocation. The writer has given counter argument on taxes are also not based on facts. The response on this is as follow Advances for direct Taxes in 4th Quarter Higher collection of customs duties realized due to essential items Adoption of Expenditures submitted in the Indian Budget Input tax adjustments are used as justification for withdrawal by FBR of provincial tax on services input tax invoicing in federal GST on goods The unusual methodology adopted for zero rating sales tax in five export oriented sectors by removing GST on inputs is subject to leakages. Advances for direct Taxes in 4th Quarter to meet the target FY The author has claimed that growth in income tax was only 13 percent in first nine months and this rose sharply to 29 percent in the 4th quarter, thereby creating the suspicion that taxes have been collected in advance from some entities. The claim of the author is not based on facts as the direct taxes also recorded a healthy growth in first three quarters. In fact, the average growth in first three quarters was more than 16 percent whereas it was around 15 percent in 4th quarter and overall growth in FY was more than 15 percent. Similarly, the healthy collection of sales tax is not due to POL products only but other sectors have also contributed to it, resulting in substantial collection growth during As per net collection of GST domestic from major revenue spinners of FY POL products contributed billion which is percent more than the collection of previous year. Furthermore, the share of POL products decreased by 3. So it cannot be concluded that share of POL products only contributed substantially in the net sales tax collection Hence FBR reasserts and is confident to achieve the next year target comfortably Higher collection of custom duties realized due to essential items The claim of the author is that the higher revenues in custom duties have been achieved through taxing the essential items. In fact, vegetables, fertilizers, pulses and Holy Quran whether in digital form or printed form were all exempted under the Fifth Schedule of the Customs Act, and no customs duty was collected on these items. Besides these goods, import of pesticide was also subject to zero percent customs duty during the financial year The collection of customs duty increased mainly due to phasing out of non-essential exemptions, improving administrative mechanism and coupled crackdown on smuggled goods in the country. It is clarified that every year tax expenditures are published in Pakistan Economic Survey before the Budget and is made available both in printed form and on the website of Finance Division. Every country makes its own policies independently as per its own requirements and conditions. Therefore, there is no need to adopt or copy the Indian practice in our country. The practice prevalent in Pakistan also ensures full transparency. Input tax adjustments are used as justification for withdrawal by FBR of provincial tax on services input tax invoicing in federal GST on goods. The FBR is aware that VAT works best when input tax adjustments are allowed. However, there is a indicators practice followed internationally that in specific cases adjustments are barred. Therefore, bar on input tax adjustment of provincial sales tax against federal sales tax should not affect overall VAT nature of GST. It is further clarified that sales tax on goods and provincial sales tax on services are two separate taxes levied under different laws; therefore, such bar should not be treated as something very unusual. Further, this measure has been adopted under compulsion and not as a choice as the settlement mechanism with the provinces was not working. The unusual methodology adopted for zero rating sales tax in five export oriented sectors by removing GST on inputs is subject to leakages As far as zero rating of imported goods and their misuse is concerned, it is clarified that a mechanism in FBR is available to control the misuse of zero rating facility. Hence, misuse of the facility of zero rating will be managed more effectively in future Power sector reforms The important reforms carried out by the present government in the power sector along with their impact are highlighted in the ensuing paragraphs, to correct misperceptions of the author Implementation of National Power Policy has pushed forward the structural reforms agenda in the power sector. In an effort to move to full cost recovery, the current government has rationalized tariffs. The new tariff as determined by NEPRA for FY has been notified by the government. The gap between GoP notified tariff and NEPRA determined tariff has narrowed to Rs per unit in FY in comparison to Rs per unit in FYwhich has resulted in reduction in TDS, with subsidies being targeted to vulnerable consumers in the residential and agriculture categories Significant efforts are being made to ensure financial sustainability of the system. A Circular Debt Capping Plan has been finalized to effectively manage the power sector financial flows, stocks and subsidy budget. Mechanism of at source deduction is being implemented for clearance of outstanding receivables from Government Departments and a feeder to feeder monitoring to curtail losses is being pursued. New Electricity Act will help improve litigation mechanism for power sector receivables. Revenue based load management is being carried out in order to ensure smooth recovery of payables. In addition, three distribution companies IESCO, LESCO and FESCO have been issued multi-year tariff determinations by NEPRA The implementation of above mentioned reform measures in the power sector have resulted in improvement in the transmission losses and recoveries. The latest available data for the first nine months of FY shows that transmission and distribution losses during this period stood at percent, down from percent in the same period of FY Similarly, bill collections during the first nine months of FY stood at percent, up from percent during the same period of FY These improvements in the sector have directly resulted in reduction in the tariff differential subsidy, which has been on a persistently declining trend over the last three years. An amount of Rs billion was paid out as TDS in FYwhich fell to Rs billion in FYwhile the TDS payment in the first nine months of FY stood at Rs billion, which clearly shows that the improved performance of the power sector has resulted in lower fiscal burden on the government With reference to the issue of circular debt CDit is pertinent to point out that the buildup of circular debt has also slowed down due to above outlined measures. It is expected that with implementation of laid down actions in the CD Capping Plan, the buildup of CD will be further arrested and will be reduced to negligible amounts over the next few years. The amount parked in PHCL is being fully serviced as part of the tariff and the government will ensure that principal amount is reduced through privatization proceeds. Thus, the Rs billion is not part of CD as alleged by the author The Government is fully cognizant of the need to improve the transmission system to ensure that the new generation capacity being not is fully utilized. In this regard, the concerned government agencies are making all out efforts for linking the new generation projects to the national grid. In fact, Finance Minister in his speech, shared the government vision towards reducing the public debt to GDP ratio to 60 percent in the next two years and bringing it further down to 50 percent over a 15 years period to make the public debt more sustainable; The editorial mentions that medium to long term Pakistan Investment Bonds PIBs were increased by percent from June till March This increase is consistent with one of the objective of Medium Term Debt Management Strategy of Pakistan wherein the government stated that it intends to reduce the refinancing risk of its domestic debt portfolio i. Resultantly, the refinancing risk of the domestic debt reduced at the end of as indicated by percentage of domestic debt maturing in one year reduced to 47 percent compared with 64 percent at the end of The editorial incorrectly mentions the public debt to GDP ratio as percent during the tenure of last government. The lower nominal GDP number is contrary to the claim of the editorial that the GDP numbers are being overstated by the government PBS computes the National Accounts according to well stated and publically shared parameters. The methodology is based on the System of National Accounts SNA which provides the internationally accepted and adopted methodology. This was followed during the rebasing of National Accounts This rebasing document was published as PBS document and is available on PBS website. This methodology has not been changed since its approval in April The data used to compute the GDP numbers is provided by a host of agencies, public and private as well as federal, provincial and local authorities. The data providers are members of the National Accounts Committee meeting and verify the data provided by them. The numbers for government sector are taken from federal, provincial and local government budgets, as approved. Once parliament approves the revised budget, the revised numbers are adopted These GDP growth estimates are provisional estimates. As per international practice, this data are revised after one year and is finalized the year after. The data presented is provisional forwhich will be revised in and finalized in In light of the fact that the methodology is fixed and the data is provided by a large number of specified organizations, PBS has no space to compute numbers according to the desires of others Successful operation Zarb-e-Azb and adoption of National Action Plan by the All Parties Conference and its subsequent implementation over seen by the Apex Committee of the provinces there has been improvement in overall security situation which helped in increase in total investment from Rs billion in FY to Rs billion in FY showing a growth of percent Similarly, fixed investment increased from Rs billion FY to Rs billion in FY showing an increase of percent over last year and 35 percent over FY The public investment also increased from Rs billion in FY to Rs billion in FY showing an increase of percent and around 44 percent over FY The private investment also increased from Rs billion in FY to Rs billion in FY showing a growth of percent over last year and 32 percent over FY However, if to be looked into as percentage of GDP it is reported at percent during FY compared to percent Revised last year. First and foremost it is stated that agriculture recorded a negative growth of percent during FY which is the lowest growth in 15 years and not 25 years as the report contends. The claim by contributor of the report that government missed all financial targets is incorrect. The Industrial Sector recorded growth of percent against the target of percent. Similarly, the services sector met its growth target which was percent. The government has been successful in curtailing the fiscal deficit at percent of GDP during FY During Jul-Mar FYbudget deficit stood at percent of GDP as compared to percent of GDP in the same period last year, which suggests that the fiscal deficit will meet its target percent. The current account deficit as percent of GDP during Jul-April FY remains at percent compared to percent last year. The external sector is balanced on account of stable exchange rate, high foreign reserves, and robust remittances bode well that the current account balance will meet its target percent of GDP. Our major share of exports go to US, China and EU. Our neighboring country, India has also witnessed percent decline in exports. STPF for export promotion is a welcome development. The writer has stated that government revenue collection of Rs. FBR revenue collection remains impressive. It recorded a growth of percent during July — April FYover last year bode well that it will achieve its target. The government has been able to achieve growth in three years time which is the highest growth in last 8 years and now moving to higher and inclusive growth. The spokesman said that the Package is announced every year before holy month of Ramadan in order to provide relief to the consumers. The ECC during discussions in meeting held on enhanced value of package to Rs billion in order to provide greater relief to consumers. The spokesman further said it is correct that an allocation of Rs billion has been made in the budget for the current financial year. An amount of Rs million has already been released to USC for clearance of arrears of the yearsand The balance allocation will be used for Ramadan Package and clearance of remaining arrears. Therefore, there is no question of scaling down the Ramadan Package. The spokesman said this is a patently false report spread with ulterior motives. The budget making is a sensitive national activity undertaken under the close and direct supervision of the senior hierarchy of the Finance Division. No foreigner has any role in the making of budget, the spokesman clarified. He went on to say that the individuals mentioned in the smear campaign are consultants hired by European Union under a grant given to Pakistan to help in improving the pubic financial management in Pakistan. None of the consultants play any role or is privy to any information regarding the budget making. In fact, they have no role in the core functions of the Ministry of Finance. The spokesman added that story being spread is anonymous and lacks any credibility whatsoever. First and foremost the present government assumed responsibilities in June with inherited challenges especially on external front. All major development partners had parted ways due to waning economic fundamentals and apparent inability of the country to service its external obligations. One of the main challenges was absence of external financing which was causing turbulence in the domestic exchange markets and tilting the composition of public debt towards domestic debt and that too into shorter maturities creating vulnerabilities and entailing high rollover and refinancing risks. Stemming the depleting foreign Exchange reserves and stabilizing a fast depreciating currency that was fuelling inflation became the paramount concerns. Pundits had even predicted a probable default by June In this scenario, the macroeconomic stability achieved by the present government is being acknowledged globally by renowned multilateral institutions. Thus it is important to maintain adequate reserves for upcoming external debt repayments. The Credit Suisse has formed a syndicate in which a number of bankers have provided resources, including Chinese Banks. These borrowings, meant for balance of payment support, have been undertaken in accordance with the provisions of law. Thus the cost of external debt contracted by the current government is highly economical. A spokesperson for Finance Minister, Senator Mohammad Ishaq Dar said here Saturday that most of the electronic and print media misread and wrongly reported that annual returns of assets and liabilities filed with the Election Commission of Pakistan ECP show that Finance Minister, Senator Ishaq Dar has taken loan from his sons. The spokesman said that Mr. The sons of Senator Ishaq Dar have paid back the entire Qarz e Hasna given to them by their father which is duly declared in the latest return filed with the ECP, the spokesman concluded. Clarification - The Spokesman of the Ministry of Finance said that the claim by Deputy Minister of Economy, of Panama, Mr. The spokesman added that Finance Minister had cancelled his visit to Washington D. Finance Minister is very much in Pakistan and performing his day to day duties, which are being covered by the media as well. Waqar Masood Khan due to cancellation of visit by Finance Minister Mohammad Ishaq Dar. The matter is being taken up with the CNN for wrong reporting, the spokesman added. Clarification - No decision, instructions for payment of Rs billion to MNAs - Spokesman Ministry of Finance The spokesman of Finance Ministry has stated that there is no truth in the reports that the Prime Minister has directed the Ministry of Finance to arrange payment of Rs billion to MNAs for development schemes in their constituencies. He said that the contents of the news, reported in a section of the press are unfounded and not based on facts. He said that neither has the Prime Minister taken any such decision nor has he given any direction to the Ministry of Finance in this regard. The spokesman forthwith clarified that the money laundering case was thrown out by the Lahore High Court as far back asyet some elements keep referring to it for ulterior motives. The said case has been quashed by the Honorable Lahore High Court vide its judgment dated 11 March This verdict has become final and should suffice to put an end to the propaganda on the subject, the spokesman said. The spokesman added that complete information about the income and assets of the Finance Minister has regularly been given in his annual tax returns filed with the tax authorities and also shared with the Election Commission of Pakistan. The details can be accessed on the relevant websites, the spokesman concluded. The contention is incorrect in so far FBR tax collection target Rs billion has not been revised upward or downward. Government is committed to meet this target, as evident from the remarkable performance in the second quarter that was not only on target but nearly recouped the shortfall in the first quarter Rs. Similarly on expenditure side, no cut on expenditures has been made. The credit expansion is more than percent. It is therefore misleading to claim slowdown in growth due to crowding out of private sector credit. The rate is market determined as nearly all foreign inflows are surrendered in the inter-bank market and all outflows for imports are made from the same market. Government or SBP does not interfere in the normal working of the market. The editorial has also chosen to criticize economic team for resisting the recommendations of independent economists, industrialists and stakeholders and relying on data manipulation to present a favorable picture. These claims have no bases. Government welcomes constructive criticism but reserves the right to respond to misleading analysis and baseless accusations. Similarly, the Government does not believe in misrepresenting facts or manipulating data. The editorial of a leading economic and business publication is expected to avoid leveling accusations based on hearsay and not on facts. Not single instance of such accusation has been cited. The Government stands ready to explain its position if such an instance is pointed out. He has stated under alarm bell-1 that government is inaugurating new power projects on monthly basis but we are producing the same electricity as we were producing four years ago in Alarm bell- 2 refers to exports that it is falling both in value and in quantities terms while alarm bell 3 states since when PML N government came to power the FDI is declining. He has also raised the question that amid these where the GDP growth is coming from? The writer should appreciate the massive reduction in power outages during the tenure of the government. When the Government came to office, there were street protests all across the country against prolonged outages. The average load shedding was around MW, which has been brought down to MW. Today, with the exception of few sporadic episodes, no such protests are taking place as majority of consumers are getting predictable supplies, while industry has been insulated from outages. There is nearly MW of power at different stages of implementation and would come on stream by Also, there is 10,000 MW being planned under the CPEC initiative. A government focusing so much on removing the power imbalance in the country cannot be faulted that it has not even addressed the issue, which is what it means when the writer says that there is no difference in power supply position between and The gradual improvement in electricity generation has helped large scale manufacturing sector to register a growth of 4. With regard to his second alarm regarding declining export, the writer should evaluate this performance in the context of what is happening to our leading competitors. China, India and Bangladesh have all experienced decline in exports at the double-digit level. This is mostly due to a major decline in international commodity prices, including rice and cotton, the mainstay of our exports. Even though exports in the first four months of current fiscal year have declined, but a reversal in the trend is visible as during October exports were nearly the same as last year. It is also not true that the foreign direct investment is persistently declining since PML N government came to office. The investment will be further geared up on account of CPEC investment program. Having argued that the writer has sounded false alarm bells, let us turn to identify the sources of growth even though this is inherent in the arguments we have already given. This broad based growth is the highest in 7 years. The total investment increased to percent provisional in FY 15 as compared to percent actual in FY13. Likewise, the savings also witnessed growth at percent provisional in FY15 as compared to percent actual in FY13. It is difficult to see how the learned writer can make an assessment of the economy on the basis of wrong data. Much of the information we have used is available in the public domain and hence there is no reason for not making use of such information, which would prevent from drawing erroneous conclusions. Rejoinder - Guarantee for Sind-Engro Power Project Approved Long Ago: Spokesman, Ministry of Finance refutes statement of CM Sind Spokesman of the Ministry of Finance has refuted the claim of CM Sindh that the Federal Government has not issued sovereign guarantee for Sind-Engro Power Project, to Chinese financiers for nearly two and half years. The fact is that the government had agreed from the outset to issue the sovereign guarantee as soon as the Sindh Government agrees on giving a counter-guarantee, as the project is a public-private partnership between Government of Sindh and a private party Engro The spokesman said that the Government of Sindh took a long time to agree to this condition and as soon as they consented, the Government of Pakistan approved the issuance of the sovereign guarantee after proper documentation. This is therefore a settled matter. The spokesman said that the Federal Government has not only agreed to issue the sovereign guarantee but has also constantly included the Thar Coal Power project among the early harvest projects under the CPEC. Despite this outstanding support, it is quite regretful that the Chief Minister, Sindh has chosen unwarranted language against federal government. Regarding the releases for K-4 project, the spokesman stated that Government of Sindh has not released any amount for this project so far. However, duringagainst a budget estimate of Rs million, Federal Government had released Rs billion for this scheme. For current fiscal yearanother Rs million is budgeted. It is strange that CM Sindh has disregarded both these facts, i. Given the significance of this scheme for the residents of Karachi, Federal Government assures the Government of Sindh that as much as they will spend on this scheme, the Federal Government will release matching grants. The spokesman added there is no basis in the assertion that the Prime Minister had announced a package of Rs. Equally baseless is the claim that the Government of Sindh is fighting this war alone from its own resources. The Prime Minister had not announced any such package. More importantly, law and order is the responsibility of provincial governments and they are receiving a significant portion of national revenues for fulfilling such obligations. Yet, realizing the gravity of the situation, Sindh Rangers, a part of federal civil armed forces, has been deployed in Karachi and is leading the war against terror. All expenses of this force are borne by the Federal Government, the spokesman concluded. It was aimed at debt sustainability and enhancing the debt servicing capacity of the country. In line with this strategy, Pakistan is on track to lengthen the maturity profile of domestic debt while keeping in view cost-risk tradeoffs as the share of medium to long term Pakistan Investment Bonds PIBs in total domestic debt increased to 34 percent by end June, as compared to only 14 percent in Accordingly, percentage of domestic debt maturing in one year reduced to 47 percent by end compared with 64 percent at the end of Dr Pasha has also expressed concern that exports are not increasing may lead to borrow more. In addition the international commodity prices have stayed low since June This has implications for textiles exports, which is the major export item of Pakistan. But a more basic flaw in Dr. Both these accounts have shown a countervailing effect on declining exports, with current account strengthening remarkable during the last 15 months. It is suggested to him that this aspect be looked into general equilibrium perspective rather in partial equilibrium. Here we would only say that the average cost of loans contracting by the present government is only 3. Most of the loans are of long-term maturity, 10 year or more. The exports are facing global recession and would not be corrected by an exchange rate adjustment. The country is saving more in reduced import bill for oil imports compared to a small reduction in value of exports due to reduced rice and cotton prices. More importantly, as we already noted, for the bottom line of balance of payments, one looks at the current account deficit and not exports alone. He is of the view that Pakistan could find itself in a worse position a few years down the road than when it started the current program. Regarding building of foreign forex reserves, he has stated that the 50 percent fall in international oil prices, combined with declines in other commodity prices has given a very substantial boost. The reserves have been build up from the lower level in when there was feeling that country would default. In line with the strategy, Pakistan is on track on lengthening the maturity profile of domestic debt while keeping in view cost-risk tradeoffs as the share of medium to long term Pakistan Investment Bonds PIBs in total domestic debt increased to 34 percent by end June, as compared with only 14 percent in Accordingly, percentage of domestic debt maturing in one year reduced to 47 percent by end compared with 64 percent at the end of Moreover, the public debt to GDP ratio is on a declining trajectory. The fiscal consolidation paved the way for a reduction in public debt, which fell from percent in to percent at the end of In the next three years, debt to GDP ratio will be brought down to less than 60 percent in accordance with the provisions of the Fiscal Responsibility and Debt Limitation FRDL Act, through effective fiscal and prudent debt does i. We are of the view that repayments should not be looked in isolation rather it should be analyzed in conjunction with projected disbursements to have a complete picture. Furthermore, the perception that all of it has been accumulated by way of contracting expensive external debt is patently flawed. Thus cost of the external debt contracted by current government is not only economical but is also dominated by long term funding to free up the cash flows for development needs in the near term. The stability in exchange rate has been achieved by warding off speculative attacks on rupee when the exchange rate abruptly shot to Rs USD in the early days of present government. In this regard the role and contribution of FX reserves can hardly be over emphasized. One must also not forget that many multilateral agencies tie up their funding to a base level of reserves and it is because of this factor that now the country has qualified to access IBRD resources thereby enabling further flow of economical resources for key infrastructure projects. The writers must bear in mind that the economic cycle has taken an upward turn and needs time to gain momentum, which we expect too happen this year and beyond. Early indicators show that FDI during the first three months has gone up by 7. The subject of exchange rate relates to central bank. However, it should be noted that at present the central bank has adopted a flexible exchange rate that allows market forces of demand and supply to play their role. Rebuttal - Responding to Mr. Ihtasham ul Haq article "Chasing imperfection" and Mr. Zeeshan Haider article "Borrowing billions" published in the News dated 5th October Mr. The criticism is based on the notion that the present issuance of bond is expensive as compared with similar issue in the past and Pakistan could not get good price. This Government has mobilized tens of billions dollars in reserves on an average cost of less than 3. The share of foreign debt in total public debt has been massively down and we have barely succeeded in bringing a nearly halt to this downward trend. This time around there were clear signs of hike in the Fed interest rate. The resources mobilized through the Eurobonds have also been used to retire the domestic debt. Rebuttal - Responding to Dr. Two more waivers have been given against the violation of key quantitative performance criteria. Cumulatively, twelve waivers have been granted. Never before in previous programs has the Fund shown such understanding and support for Pakistan. However, the press note released after the board meeting reveals a number of misperceptions about Pakistan. The first is the statement that economic activity is picking up pace and vulnerabilities are gradually receding. Unfortunately there is not much evidence of economic activity showing revival the writer stated. At the outset, let us respond to his unsubstantiated claim that Pakistan has received highest number of waivers in the history of IMF programs. There is a need for proper appreciation of a waiver. The request for a waiver is allowed only after ensuring that the dynamic criteria are fulfilled. The Fund program is not a one-off static assessment of certain outcomes. It is a three-year program and, in each review, the performance is assessed keeping in view the likelihood of success as the program moves forward. Invariably, the waiver is granted after making sure that not only the past efficiency has been corrected but the likelihood of fulfilling more stringent criteria for the following quarter is also met. The waiver, indicators, implies that the program remains on track. The writer is very selective in choosing the indicators of his choice and build up the arguments. In the article he has taken major crop sector that it grew less than 1 percent as compared to 8 percent in and it was only through some exaggeration that a GDP growth rate of over 4 percent was shown for The writer has ignored other economic indicators which are showing good performance. This improvement in the external sector was crucial in maintaining exchange rate stability and also in mitigating global risk perception for Pakistan. A stable outlook of inflation and balance of payments even allowed policymakers to implement pro-growth strategies. The government has cut policy rate significantly by a cumulative bps which is lowest in last 42 year to provide more credit to private sector. Similarly, on the fiscal side, development expenditures by the government remained strong amid fiscal consolidation. Overall public investments witnessed improvement. The writer is not true in this statement. With enhanced security initiatives by the government a peaceful and enabling environment is taking place through the operation Zarb-a-Azb. Karachi which is the economic hub, economic activities have started improving. Going forward the foreign direct investment during first two months of current fiscal year has also increased. With regard to his observationthat reforms should aim at securing a reliable supplyof electricity and gas and reduce fiscal risks posed by these sectors. Inelectricity consumption increased only modestly while that of the natural gas declined. The tariff differential subsidy in the power sector was higher by Rs. Similarly, there was a big shortfall in revenues from GIDC of Rs. The circular debt in indicators power sector has approached Rs billion and the government has pursued the easy policy of selling off shareof profitable entities to help build foreign exchange reserves. Meanwhile, subventions continue to PASMIC, PIA and the Railways. Restructuring is proceeding at a slow pace. It is for his information that Power Policy has pushed the structural reforms forward. With the introduction of merit order in fuel supply and gradual elimination of circular debt, the supply of electricity is already improving and unplanned outages, trappings and forced load-shedding has almost been controlled across the country. As a result of better sector management, supply of electricity has improved. With regard to Privatization and Restructuring, the strategy is based on a number of pillars, which include divestment through strategic partnership and public offerings, strengthening enforcement of corporate governance rules, implementation of restructuring plans and regulatory reforms. Transactions of United Bank Limited, Pakistan Petroleum Limited and Habib Bank Limited have been completed so far, while Financial Advisors have been appointed for eight DISCOs - Islamabad, Lahore, Faisalabad,Hyderabad, Peshawar, Quetta, Sukkur and Multan Electric Supply Companies IESCO, LESCO, FESCO,HESCO, PESCO, QESCO, SEPCO and MEPCO, respectivelywith transactions planned to be completed from end-March onwards. Railway Revitalization Strategy has been implemented, under which Pakistan Railways PR has been making institutional, operational and financial progress since FY Financial advisors have been appointed for Pakistan International Airlines PIA to seek potential options for restructuring and strategic private sector participation in the core airline business. The diligence process has been completed which will be followed by transaction advisory and finalization of restructuring options. A comprehensive restructuring plan has been implemented for Pakistan Steel Mills to prepare for potential strategic private sector participation in the company. Operational efficiency has begun to improve and capacity utilization has increased from 18 to 40 percent. The economic downturn in China and uncertainty created by Fed decision punctuated the weak market conditions forcing cancellation of planned issues by several issuers having strong credit ratings. The resources mobilized through the Eurobond have also been used to retire the domestic debt with lower cost. With exchange rate stability, there is no fear of capital loss and hence the bond will remain competitive. Government is gradually moving towards achieving revenue surplus and reducing its public debt to GDP below 60 percent to ensure that both the level and rate of growth in public debt is fundamentally sustainable and can be serviced under a wide range of circumstances while meeting cost and risk objectives. Accordingly, debt to GDP ratio is on a declining trend. The writer is perhaps unaware of the turnaround achieved in the economy which was near default when the reins of power were handed over to the present government Mr. Sherani needs to understand that it is the vision of Prime Minister Muhammad Nawaz Sharif that has guided the work for the revival of economy in just two years. This performance is respectable under an environment when most emerging markets are afflicted by low growth cycles. Key macroeconomic indicators like inflation, fiscal balance, and current account balance have recorded unprecedented improvement. This is not a picture of an economy in drift, but one that is gaining momentum, stability, growth and prosperity. Sheerani has to evaluate these gains dispassionately and without having preconceived notions. It is requested that the above may please be accommodated as a response from the Ministry of Finance. Syed Ejaz Wasti Economic Advisor, Ministry of Finance Islamabad Rebuttal - Responding to Mr. Asad Omer has criticized recent lunching of euro bond saying that it received poor response by the global markets as investors remain unconvinced of the improved economy narrative that the Government of Pakistan has been trying to sell. Pakistan came to the market on the back of a good track record of economic management since its last issue. The investors were appreciative of the progress made in stabilizing the economy and reforms carried out in critical sectors of energy, privatization, tax administration and investment climate. The economic downturn in China and uncertainty created by Fed decision has punctuated the weak market conditions forcing cancellation of planned issues by several issuers having strong credit ratings. Bloomberg News says that despite challenges a corporate earnings in Pakistan are soaring and b stocks have surged. Similarly, 3 top world media houses like the Bloomberg, Forbes and the Economist etc have reviewed that with a fast improving security, dynamic Pakistan has the potential to be a global turnaround story. Furthermore, Pakistan has witnessed the resumption of policy lending from the World Bank and Asian Development Bank, which was suspended for the lack of a stable macroeconomic framework before June After achieving macroeconomic stability and the requisite increase in foreign reserves in FebruaryPakistan is declared eligible again for IBRD facilities. Additionally, remarkable increase in foreign exchange reserves has also helped in abridge the current not gap. The government is cognizant of the slowdown in exports, a Cabinet sub-committee has been constituted under the chairmanship of the Finance Minister to accord greater attention to exports and related production sector. The committee has been tasked to device steps and measures, which could enhance exports in the short term on one hand and deepen the orientation of economy towards exports on the other hand. The FDI which writer stated that it has declined in FY15, he knows the reasons of decline in FDI in FY15 as compared to last year. The investors adopted wait and see policy due to the uncertainty created in the initial month of last year, but now things have started improving. During July-August FY16, there is uptick in FDI as it witnessed a growth of percent. It will further improve on account CPEC investment programme. Pakistan holds enormous potential for economic growth. The revival of growth that started in has accelerated in The Medium Term Budgetary Framework is a roadmap and sets timelines for achieving high growth rate. The growth of GDP is targeted for at percent and gradually steering to over percent by in the the years. Syed Ejaz Wasti Economic Advisor, Ministry of Finance Islamabad Special Assistant to Prime Minister on Law, Ashtar Ausaf Ali, Advocate in a statement issued here on Tuesday strongly rebutted Mr. He said that it is unfortunate that Mr. Zardari has leveled a wild allegation against the Finance Minister Mr. He seems to have been ill informed and ill advised. Ashtar Ausaf went on to say that insinuation reported in the media calls for clarification so that the truth accepted by superior Courts be made public. The record should be corrected once for all, he stressed. He said that the Hudabiya Paper Mills case Reference No. This verdict has become final and should suffice to put an end to the malicious propaganda on the subject. That even earlier the Hudabiya Paper Mills case was thrown out by the Lahore High court, as far back asyet unscrupulous elements keep referring to it for ulterior purposes. The campaign of vilification and slander against the Finance Minister despite the said judgment goes on for ulterior motives. Ashtar added that despite microscopic and forensic examination of record, both private and public, no wrongdoing was ever found by any of the investigating agencies. This speaks volumes of unblemished professional and political career of the Finance Minister The SA to PM further said that persons involved in the shameful and unscrupulous maneuvering against the Finance Minister are called upon to restrain from further propaganda about any alleged confessional statement and should appreciate for once, the ruthless pressure faced by him and the sufferings of the family which was resisted even in the most oppressive regime of Gen. Musharaf and details of which were made public in without any rebuttal from any quarter. He stated that the above facts have been given in detail to prevent people from disrespecting the judgments of the superior courts as well as publishing slanderous statement about the Finance Minister. However, should someone was to continue to level baseless accusations against him, he would have the right to take legal action against the Kazzaab Liar which may not be limited to civil proceedings only but may also entail criminal proceedings under the law within and outside Pakistan, Ashtar concluded. This is all termed as a joint operation of the three stakeholders. The writer should be mindful that the IMF as an independent institution makes assessment of every member country separately based on thorough research and does not blindly follow the facts and figures provided to them. The fact remains that ground realities are not changed through depict. The writers should understand that the present government inherited a fragile and weak economy which was on the verge of collapse. The government took bold initiatives keeping aside political considerations and swallowed the bitter pill to cure the health of the economy. The structural adjustment programme was taken in an environment of challenges and lot of work was undertaken to accomplish the bench-marks in a given time frame which smoothened the reviews. The agriculture sector grew by 2. Now the issues are being addressed and outlook is much brighter. Going forward the Chinese government has also come up with historic investment program, which is a good omen and will have direct and indirect impact on the economic health of the country both from supply and demand side. Undoubtedly, international prices of commodities and petroleum products have a role in slowing the inflationary pressures. But this trend was set in motion well before the downturn in the international prices. The fundamental factor behind the lowering inflation is the fiscal adjustment and monetary containments, both of which have been achieved during last year. With regard to falling export it should also be looked into the context of global economic environment. However, the government is cognizant of the issue and taking all possible measures to increase the level of exports. The discount rate has been lowered down which will increase credit to private sector to enhance productivity and exports. The author has objected to the treatment of HBL privatization proceeds as revenue. He has also questioned that how SBP as a regulator can hold the shares of a commercial bank. In this regard, it may be noted that shares of the commercial banks HBL, UBL, ABL, MCB have been held by SBP since the nationalization of these banks i. The shares of banks have not been privatized during the present regime only; shares of banks were also sold in the market in the earlier periods. The treatment of publicly held shares is the same as was adopted in the previous periods, including the then Fund program. The figures relating to financing of the budget deficit have no basis as assumed by the writer. The writer should acknowledge the sacrifices our forces are making to carry out operations to achieve peace which will further ensure investment and savings which are mirror image of the country. The international analysts and observers are all praising our performance and potential for future growth. Similarly, 3 top world media houses like the Bloomberg, Forbes and the Economist etc have reviewed that with fast improving security, dynamic a Pakistan has the potential to be a global turnaround story. The writer has made comparison between SBA and EFF programs. It may be noted that both the programs are totally different in terms of their structure. Therefore, the Program was suspended after merely four reviews. The suspension of the program posed negative impact on the economy. As IBRD funding was stopped, World Bank and other international financial institutions closed the doors. International rating agencies downgraded their ratings for Pakistan. Foreign exchange reserves dropped significantly. International predictions were that Pakistan would default in June, On the other hand, the EFF Program is for strengthening the BOP position as well as the repayment of earlier loan taken by the previous government. Pakistan has completely repaid the earlier loan. If a comparison has to be made, it is more appropriate to compare that the SBA had only completed 4 out of 7 schedule reviews which were 57 percent of the program, whereas under the EFF, 8 reviews out of 12 have been successfully completed which is 66 percent. Therefore, the EFF is much more successful a Program. Conversely, only 65 percent of the total amount was disbursed under SBA. The writer has also not given due importance to highlighting the economic conditions prevalent at the time of two Programs. When the present government came into power, it embarked on its comprehensive reform agenda to reinvigorate the economy, spur growth, maintain price stability, provide jobs to the youth and rebuild the key infrastructure of the country, which were the main feature of its manifesto. Therefore, Pakistan entered into IMF program to improve the medium-term growth outlook, provide macroeconomic stability, strengthen its reserves and Balance of Payment position and open the window for multilateral, bi-lateral foreign funding for our mega development projects. The present IMF program is the only program that has run successfully despite having a broad based structural reforms agenda besides the standard aggregate demand management features. Never before, the country has seen such major turn-around in its economic health as has been achieved during the program. All major economic indicators have recorded remarkable improvement. One cannot find rival examples of the bold initiatives the present government has taken in making the adjustments in administered prices and new tax measures even at the risk of losing its political capital. The government did not hesitate to clear the mess it had inherited and swallowed the bitter pill of taking tough decisions only to restore the economic health of country. Thanks to these interventions, IBRD after a gap of 3 years has allowed Pakistan to access its funding facilities. Likewise, World Bank, ADB have opened their windows. The writer has, apparently, ignored all these facts and instead of acknowledging the milestone achievements secured as a result of the reform agenda, has tried to mislead the readers by comparing the presently ongoing EFF program and the previously SBA program totally out of context. He said the Finance Minister in his letter to PTI Chief Imran Khan had categorically stated that details of all his sources of income and assets have been regularly reported in his tax returns which he filed with the FBR. Details of his assets are also annually filed with Election Commission of Pakistan, which makes the same public through gazette notification and anybody can access this information and detail. It is pity that instead of realizing the mistake after receiving aforesaid letter, the PTI spokesperson continued disseminating baseless and malafide stand in order to mislead people at large. It is important to note that is responsibility of the Secretary Finance to apprise the Finance Minister about the decisions of SBP Board of Directors after conclusion of its meeting. The Minister in turn shared this information with the media at P. M during his press conference. Some media have reported that the Finance Minister announced the policy rate while the meeting of the SBP Board of Directors was still on which is misleading as the said meeting had already concluded at 2 P. The Finance Minister announced it at P. Clarification - Finance Ministry Spokesman Clarifies Reports about Hike in Power Tariff The spokesman of the Ministry of Finance said here on Saturday that a section of media had carried misleading reports about hike in power tariff and inflated billing with certain insinuations. The spokesman categorically stated that the Finance Ministry had nothing to do with the hike in power rates or for that matter with the inflated billing. He said the effect of that tariff had been fully absorbed during the last fiscal year. As far as the reported over billing last month is concerned, the spokesman clarified that it was the Finance Minister who recommended to the Cabinet to appoint independent auditors to scrutinize the reported over billing so that exact responsibility can be fixed, action taken against those responsible and corrective measures also be taken. Finance Minister Senator Ishaq Dar has said that the allegations of Allama Tahirul Qadri that at the time of taking over by this government, the total debt was Rs trillion and during the last fourteen months the government has added Rs trillion in public debt is absolutely incorrect and baseless. He said that when the government of PML-N took over, the total public debt was Rs trillion and during the last one year, there has been no significant increase in the overall public debt. He further said that the government is working on a well-planned comprehensive strategy to shift expensive debt into a cheaper debt in order to reduce the overall public liabilities. He should understand that IMF earlier estimated growth at percent, which was scaled up to percent in first review and further percent in the second review and thereafter to percent in their third review based on two quarterly economic and financial performances, which they termed positive development on the part of Pakistan economy Similarly, the writer should also understand that IMF earlier projected 10 percent inflation and in third review revised down to percent on the basis of contained inflationary trend since November,which had risen to double digit. Furthermore the full year data has been released, according to which inflation is restricted at percent despite adjustments in administrative prices, which were delayed by the previous government and huge stock of subsidies were building up and fiscal deficit was rising. These achievements may be looked into the background when economy was facing challenges like security issues, lost confidence of the investors, high fiscal deficit, low tax collection, high budgetary borrowing, and unstable exchange rate and depleted foreign exchange reserves etc It is important that the writer should understand that the percent growth was based on three quarters economic performance against the revised growth of percent forwhich increased on account of present government followed a focused policy particularly resolving energy crises which helped in stimulating muted LSM growth. Moreover, it is equally important for thewriter to understand that the growth numbers are based on nine months data. These numbers are provisional and remain provisional till full data becomes available over the following months. As it increased by percent Rs. Moreover, government borrowing was significantly contained as it stood at Rs billion from Rs. Considerable fall in government borrowings from the banking system, due to contained fiscal deficit and higher financing from non-bank sources was the main reason behind this deceleration in monetary expansion. In this regard, the government is making significant progress in reducing deficit, as it was brought down to percent from percent last year and lower than target of percent. This year it will not brought down to percent Present government is following a comprehensive resource mobilization strategy with the aim to increase tax to GDP ratio to 15 percent in the next forex years. It comprises three-pronged measures such as broadening of tax base, removing anomalies in the taxation system improving tax compliance, and elimination of SROs regime with an aim to evolving a simple, transparent and an equitable tax structure. These efforts will does lead to a tax regime which will help in promoting the growth paradigm It is also pertinent to mention here, that number of SROs issued over many years have now been focused to phase out the concessionary regime, which has not only caused huge loss to national exchequer. In this connection a high-powered committee approved by the Prime Minister diligently reviewed and extensively deliberated on the entire concessionary regime on the basis of principles developed after broad-based consultations. The committee, which included representatives of trade and industry, recommended phasing out of the concessions over a period of three years, which has been approved In order to maintain the fiscal discipline, government has stringently focused on prudent expenditure management through curtailing current expenditures, phasing out of electricity subsidies and restructuring of PSEs. Moreover, the provinces have supported the consolidation efforts and are on-track to deliver the envisaged surpluses. Rather, government was more cautious in executing development plans. In this regard, government is giving priority to only those sectors of the economy whose revival is crucial for the sustainable economic growth of the economy like irrigation, water, power, infrastructure and education Similarly to enhance export led growth, number of measures has been introduced for export promotion such as: Rebuttal - Mr. Pakistan Bureau of Statistics posted the annual release calendar, duly approved by the Governing Council on its website in October, As per the release calendar, Q3, Q4 and annual GDP growth numbers combined to be released in May. The detail clarifies that provisional figures, revised and final figures of previous years will be released. A cursory reading of the same would show that the PBS has not deviated from its schedule. As for numbers for all four quarters, they would be released in October after reconciliation with annual accounts. Rebuttal - Syed Khalid Mustafa news item titled "GDP Growth Worked Out? The author is harping on the issue that the GDP growth number for are much lower than those estimated by the PBS. The data for the balance of the year is projected, which is the reason that these numbers are provisional, and remain provisional till full data becomes available over the following months The correspondent has also commented on the quarterly GDP estimates. The IMF accepted the figure of PBS which should be ample proof of the reliability of the statistics released by PBS As far as the question of withholding the information of large scale manufacturing is concerned, it is completely baseless. The Quantum Index Manufacturing Industries QIMthe indicator being used to measure the performance of this sector, is compiled on the basis of information received from three major sources including Oil Companies Advisory Committee OCACMinistry of Industries and Provincial Bureau of Statistics which takes time and is published after certain time lag. The latest available information was up to the month of February, was used to derive the estimates of large scale manufacturing which were approved by the NAC. Further, the writer has completely misstated the facts by quoting that the budgeted PSDP of Rs billion has been used in the compilation of value addition of construction. The fact is that total value addition of construction sector even at current prices is Rs billion; therefore, the question of inclusion or exclusion of these PSDP figures is not relevant The correspondent has also mistakenly attributed the profits of commercial banks with the value addition of finance and insurance sector. He has not given any analysis to support his claim but has picked up a number that is being bandied about in the press. Present Government is fully committed to continue the operation as long as the militancy is completely wiped-out from the country and the Government will provide all required resources to complete the operation which is ensured by the Finance Minister in the Parliament. Delay in the restructuring of NEPRA will also affect the privatization plan for power distribution companies It is clarified that the fourth review under the IMF Extended Fund Facility is tentatively planned in August and not in July and the place of the meeting is also not decided as yet. Most of the Policy Actions and Structural Benchmarks for the fourth quarter of FY are to be met by end June and therefore it is early to judge if the Government is lagging behind on them or not. It is clarified that there is no delay on account of slow progress of GoP to undertake necessary policy actions. The fourth review meeting is as scheduled which is the quarterly after the last review in April, On the restructuring of NEPRA the government is on track, entry and middle management positions have already been hired to enhance the technical capacity of the regulatory body and in order to begin addressing the administrative and technical constraints a diagnostic study of the regulatory framework of power sector has been conducted and an interim report prepared. The ECC had approved the issuance of policy guidelines to NEPRA for rationalization of line losses. Extensive work has been done by the GoP on a three year plan to phase out tax exemptions granted through the SROs. Initial phase of removal of exemptions has also been incorporated in the Budget Clarification - Reference news item appeared in daily "Express " on June 16, in which it was stated that public debt has reached Rs. It appears from the news item that the reporting of the public debt is incorrect as it contains self contradictory statements. For example the reporter has mentioned in the later part that Rs. Shahbaz Rana report titled "Playing with numbers: Projecting a rosy picture" appeared in daily "Express Tribune" on June 16, The above titled report appearing in the Express Tribune on by Mr. Here again, a detailed rebuttal of the report has been issued to the Express Tribune today, a copy of which is also enclosed herewith. Rebuttal - Reference news item appeared in daily Express Tribune on June 14, titled "Figures fudging? The government has announced a number of measures to provide incentives to the agriculture sector, including introduction of Credit Guarantee Scheme, Crop Loans Insurance Scheme, Live Stock Insurance Scheme, enhanced credit to farmers, reduction of sales tax on tractors, etc Through the Financial Bill the government has proposed to introduce Credit Guarantee Scheme in order to encourage banks for financing small farmers. It will benefit 300,000 farmers and size of the total disbursement will be Rs. Budget cost of this scheme is Rs billion. Moreover livestock insurance scheme for all farmers up to 10 cattle has been introduced with allocation of Rs million It has also been proposed to reduce sales taxes on tractors from percent to 10 percent and this reduction alone will benefit the whole farming sector in Pakistan. The government will also provide facilitation through State Bank of Pakistan for developing a mechanism to establish quality warehouses, cold storages and cold chains. It has become an old fashion to dismiss the change and progress by criticizing something which otherwise is opposite to reality As the Finance Minister said in his budget speech that the current year was fire fighting year and after period of consolidation and reforms we have now adopted to look Out Of the Box and shifted in different modes to bring consistencies in the policies for betterment of the economy. We have now focused on lengthening the maturity profile to reduce the re-financing risk along with sufficient provision of external inflows to help in reducing the pressure on domestic resources. The government has also launched secondary market trading of government debt securities at the stock exchanges in the country which will also be helpful in obtaining long term financing for the government in future. The editorial is not only based on factually incorrect news item but also contains unfounded assertions The matter of the fact is that the premier civilian intelligence agency of Pakistan, in the wake of prevailing spate of terrorism and the increased level of threat, moved a summary for the purchase of two high security vehicles for security duties which are adequately equipped to meet the requirements. It may be mentioned that there were frequent visits to Pakistan by the foreign dignitaries in the last six months and the requirements to purchase these two cars were aimed at providing fool proof security during these high profile visits. The permission to import two cars for security purposes was granted in the view of the above mentioned circumstances and not for any other purposes The exemption from taxes was granted with a view to minimize public expense. It is categorically denied that these cars have been purchased for the Prime Minister or are being included in his security detail. These vehicles are exclusively reserved for the V. This is a level where the country can deal with international institutions in a dignified manner The reference to borrowing and debts is again misrepresentation of the true picture. The government has retired equivalent value highly expensive domestic debt as a result of foreign inflows, which has saved billions of rupees to the government on account of interest only. The news item contains information which is contrary to the facts The matter of the fact is that the premier civilian intelligence agency of Pakistan, in the does of prevailing spate of terrorism and the increased level of threat, moved a summary for the purchase of two high security vehicles for security duties which are adequately equipped to meet the requirements. P dignitaries visiting from abroad As far as austerity is concerned, the Finance Minister Senator Ishaq Dar has introduced financial discipline in the Federal Government. It should be appreciated that for the first time in the history of Pakistan, discretionary funds of the Prime Minister and the Federal Ministers have been abolished. Moreover, the secret funds of the Federal Ministries excluding national security institutions were also abolished. Secondly, the article mentioned that the external debt has increased by 15 billion dollars in the current fiscal year but we would like to mention that our government has been efficient and responsible in paying off its liabilities which have accumulated because of the imprudent fiscal management of our predecessors but still are the responsibility of the Government of Pakistan. We have paid million dollars more than what we have borrowed during the current fiscal year till March We hope that your newspaper will also give the rebuttal prominent place on its pages. Clarification - Reference new items published on May 08thin the national press, containing comments of former Finance Minister Dr. Hafeez Pasha made while speaking at an event on budget proposals organized by the Institute for Policy Reforms Reference new items published on May 08thin the national press, containing comments of former Finance Minister Dr. It is worth mentioning that borrowing is beneficial for economic development of any country as long as it is undertaken to facilitate the well thought out road map devised with due diligence. These loans are expected to remove the structural bottlenecks which are hindering the development of the economy like energy crises. Pasha has already endorsed the government plan to revive the energy sector as most of the current borrowing is done to overcome the energy crises. These loans will promote economic development and bring prosperity to the future generations instead of exerting dire consequences It is most important to mention that Mr. The said amount will result in reduction in public debt stock. As a result of the external financing, the Government of Pakistan has off loaded a proportionate domestic debt. Whereas, the external borrowing has been made on a minimal interest rate. It has saved Government of Pakistan a huge amount on account of interests only. Add to it Pakistan needed to pay off the due repayments to IFIs including IMF In order to cope with the said challenges, the Government started revamping the economy through structural measures such as broadening the tax base, restructuring the PSEs, building foreign exchange reserves and reducing the fiscal deficit. The said paragraph also ignores the external debt repayments over the next five years. It may be mentioned that there is no overall debt increase. Morover, the claim of Debt to GDP ratio of 63 percent in nine months is also incorrect. He said that no such proposal is under discussion or being considered at any level. Clarification - Reference news item, published in a section of press, quoting Finance Minister that there is no proposal to consider increase in the pay and pension of the government employees Reference news item, published in a section of press, quoting Finance Minister that there is no proposal to consider increase in the pay and pension of the government employees The Finance Minister has categorically denied that he has made any statement to this effect in the National Assembly. Rebuttal - Response to the article captioned "Statistical Issues Revisited" by Dr. The author himself states that he has calculated the Quarterly National Accounts QNA by the expenditure method. He then launches into an academic discussion on the method to calculate the QNA via the expenditure route. Relying on BR Research, he proceeds to give his numbers on the various components of growth. The data used for exports and imports is taken from different sources PBS for exports, SBP for imports and the negative growth shown in investment measured through PSDP expenditures is not borne out by the Fiscal Operations data. In absence of any reliable data, the author relies on sales tax, excise duty and petroleum levy to calculate the size of private expenditure. The three proxies are themselves beset with inherent weaknesses of coverage. Moreover, the expenditure side of GDP has never been used for annual national accounts because of huge data gaps. The Pakistan Bureau of Statistics has compiled the QNA through the production method. The constraints of time, resources and data availability are more in QNA. The QNA adopts the same principles, definitions and structure as the Annual National Accounts ANA. The overall reference for concepts and methods is the System of National Accounts SNA and the Manual of International Monetary Fund IMF on QNA. Change of base of National Accounts of Pakistan, document has been followed in QNA. Eshya Mujahid and the national accounts compilers discussed the issues and reviewed the estimates prior to release QNA has to be consistent with the ANA and more accurate estimates of the ANA will improve the quality of QNA. Since the sources of both estimates are same, discrepancies will not be high. Sum of the four quarters will be equal to the annual estimates. While aligning the QNA to the ANA, the short term movements of the QNA will be preserved as much as possible. This is the central theme for this exercise The pattern of the finalization of ANA will be followed in the QNA as well. The quarterly accounts within a year will become final when the annual accounts of that year are declared as final. Current year quarterly and annual accounts will remain provisional. Not the previous year quarters will be treated as revised. Results of QNA are mainly compiled for the purpose of observing the business cycle. Takehiko Nakao, President ADB called on Finance Minister Click here for details Meeting of the Finance Minister with MD IMF Click here for details Joint Press Release - Ministry of Finance and State Bank of Pakistan Click here for details Finance Minister chaired a meeting to Review preparations for CAREC meeting Click here for details Finance Minister chaired a meeting to review arrangements for the launch of Pakistan Microfinance Investment Company Click here for details Finance Minister chaired a meeting to review arrangements for international events planned for the next week Click here for details Response Article titled "Self praise by MoF" has been published in the Business Recorder dated written by Ms. Patchamuthu Illangovan, Country Director World Bank called on the Finance Minister Click here for details Increase in stipend for BISP beneficiaries Click here for details Rebuttal Reference news item appeared in Daily Times on title "Government considers freezing foreign currency accounts" Click here for details Grant of increase in pension to pensioners of the Federal Government Click here for details Rebuttal Reference news article by Dr. The data available for nine months, and in some cases for six months, is annualized and used As far as the compilation of unemployment rate is concerned, it is worth mentioning that PBS has been following the internationally approved methodology over the years and no change in compilation procedures was carried out during the referred years. The healthy foreign exchange reserves act as cash buffers while helping to boost investor confidence for economy The issuance of Sovereign Sukuk Bond is a part of financing plan Budget and has no relevance with the end of IMF program and unsustainability of foreign exchange reserves as claimed in the news article. Above all at the time of budget announcement, Finance Minister in his budget speech has categorically described the measures for export promotion and is available on MoF web site The government is taking serious efforts to address the issue of declining exports. These are due payments and are projected to be received during current financial year On the other hand growth in current expenditure has been considerably reduced which has become possible due to decrease in fiscal deficit and resultantly less domestic interest payments. In fact, current government is discharging the pending liabilities of previous governments Power sector operates in a regulated environment and energy prices are also determined by power regulator NEPRA by keeping in view the revenue requirement of distribution companies Discos. It is expected that the collection will pick up in coming quarters more rapidly and the loss occurred in first few months would be compensated However, there are various reasons for this decline. Similarly, the price per litre was also higher in first quarter of as compared to resulting in reduced collection of sales tax The sales tax collection on imports grew only by percent and less than expected growth of sales tax on imports is due to the zero-rating of the inputs of five export sectors and the substantial reduction in sales tax rate on Urea fertilizers. Moreover, revenue measures taken in the last budget will take some time to yield the desired yield and after the usual lag will offset the impact of the relief measures taken by the government for overall economic growth The reason for the decline in income tax revenue through demand creation is that the field formations have been facing various problems. This differential treatment has not only been introduced in banking sector but also other sectors like purchase of movable and immovable properties With regard to the effective rate of customs duty on imports ,it has gone up from 6 percent to 9 percent, it is clarified that in the reforms process during the last three years, not only the maximum rate of Customs Duty has been brought down from 30 percent to 20 percent, the Customs Duty slabs have also been reduced from 7 to 4 i. In the budgetthe duty rate of more than two thousand items, mostly machinery and primary raw material, was reduced from 5 percent to 3 percent, extending benefit of more than Rs billion to the industry Regulatory Duty has been imposed mainly on two types of goods, firstly some selected items of non-essential nature to reduce the trade deficit and protect precious foreign exchange and secondly to protect local industry in the wake of unusual fall in prices of certain goods in the international market On the issue of payment of refunds it is important to mention that the FBR is trying to promote tax culture and taxpayer friendly environment in the country. This percentage has declined during the last three years and the net collection as on 30th June was Rs billion whereas, the pending refund claims were percent of the net collection FBR has cleared sales tax refund claims of Rs billion which have been electronically transferred to accounts of refund claimants. In fact, IMF recent debt sustainability analysis shows that external debt would remain on a downward trend over the medium term, with the peak in external financing needs under the most stressed scenario percent of GDP staying well below the risk assessment benchmark of 5 percent of GDP. Further, credit rating agencies in their recent reports acknowledged this fact that Pakistan external debt is on sustainable path and there is very little exposure to medium term vulnerabilities; Similarly, the news items quoted total external debt and liabilities servicing amounts which are not entirely the responsibility of the government. It is to be noted that the risk profile of domestic debt is entirely different from external debt and that domestic debt is perpetual in nature and is constantly refinanced through new issues. It would be inappropriate to consider domestic debts maturing in the near future as posing any risk of default as a sovereign owes these debts in the local currency. Government conducts three auctions in the domestic market per month, one for investment bonds of various maturities years or more and two auctions for treasury bills of maturities of 3, 6, and 12 months. Participation in each auction ranges from Rs billion to Rs billion and accordingly government refinances its domestic debt from domestic market as a standard practice prevailing in all jurisdictions having competitive debt markets. Domestic market both primary and secondary are very well developed and established in Pakistan and as such the government does not feel any cause for concern with regard to refinancing its domestic debt which is also evident from the fact that the yield curve of short term and long term debt have both been declining steadily for past one year and the yield curve is flattening across the maturity profile which again is a sign of stability. With these targets, fiscal policy will be anchored at a prudent stance, leading to additional gradual consolidation and strengthening long-term debt sustainability; It is important to note that these amendments were made regardless the tenure of any political government and purely aims at reducing the debt burden of the country; Every amended clause was discussed at various forums such as Senate Committee and also in National Assembly through Finance Bill The above facts clearly establish the fallacious views and opinion mentioned in the news item regarding the state of public debt management in Pakistan Rebuttal - Reference news item appeared in Daily Times on title "Government considers freezing foreign currency accounts" The news item titled "Government considers freezing foreign currency accounts" which appeared in the Daily Times on 29th September, comprises false statements and concoctions which have no ground. There is no proposal from any quarters to freeze foreign currency accounts in the country There is no question of debt sustainability in the country and the newspaper has carried baseless and unverified reports without quoting any source which again shows irresponsible reporting Rebuttal - Reference news article by Dr. Therefore, economic managers would always prefer high real GDP growth coupled with low inflation rather than low real GDP growth coupled with high inflation Public Debt Statistics Public debt stood at Rs. The public debt number of Rs. The clarity regarding public debt definition has been communicated several times at various forums to the writer, however, this news item is another attempt to deliberately mislead the readers by reporting the number which is inconsistent with the public debt definition; The cumulative increase in public debt during last 3 years was Rs. The key achievements of the present government on fiscal side are as under Fiscal deficit has been reduced from 8. The Prime Minister did not pass any such orders. The Finance Minister presides the ECC just as previous Finance Ministers have presided and wields no additional powers than what have been prescribed under the Rules of Business for the ministries and divisions assigned to him The Finance Minister holds the meetings of the ECC with regularity and does not allow agenda to accumulate unlike the past when huge agenda was allowed to accumulate and meetings were not held regularly. The discussions in the ECC, on a Summary, are frank, candid and meaningful. Decisions are thus made by ECC after considering all aspects of the case and in the best interests of the public The news article has attributed things to Finance Minister which are completely unfounded and by misconstruing the ruling of the honorable Court. The news article contradicts itself in the subsequent paragraph by stating various indicators related to EDL which were published in Economic Survey of Pakistan for the year In fact, the government published EDL related indicator till in Economic Surveys of Pakistan and later External Public Debt was used as an indicator in due to the following reasons Government has formalized the definition of public debt through the amendment in Fiscal Responsibility and Debt Limitation Act which has been approved by the National Assembly. It is worth mentioning that there will be no impact in the public debt data as disseminated by the government either in the past data or going forward. Furthermore, external liabilities and debt of other sectors were never considered as external public debt rather these are obligations payable by other entities like commercial banks, private sector entities etc. Hence the policy decision was applicable on new and past data regardless of the tenure of any government; The news article blatantly ignored that in the same economic surveya detailed debt risk indicators analysis was included which calculated external debt risk indicators by using official foreign exchange reserves held with SBP and Net International Reserves which are even lower as compared with gross foreign exchange reserves The news article made a false claim that the present government has expanded foreign exchange reserves to include foreign exchange held by private citizens in commercial banks. The basis of this number has been consistent for the last five years or so as published in Economic Surveys of Pakistan. The present government has made remarkable gains in reducing debt burden of the country and improve the debt sustainability indicators. On the external front, the major development partners had considerably scaled down their support due to waning economic fundamentals and apparent inability of the country to service its external obligations in the near future. The importance of lengthening the maturity profile of domestic debt became inevitable while maintaining interest rate stability and regaining growth momentum was also required to counter the impact of indebtedness On assuming office, the present government took necessary steps for avoiding default, ensuring fiscal discipline and consolidation, stabilizing a collapsing economy and accelerating growth. The government started revamping the economy through structural reforms and stabilization measures such as reduction in un-targeted subsidies, broadening the tax base, restructuring the Public Sector Enterprises PSEsbuilding foreign exchange reserves and reducing the fiscal deficit, while ensuring that social safety net and development spending are not only protected but enhanced considerably. With the improved economic fundamentals in the country, this rating now stands higher at B3 with a stable outlook. It is worth mentioning that the fiscal deficit was successfully brought down from percent of GDP in ; The development budget has been gradually and adequately raised in order to meet the investment requirements of a growing economy. Federal PSDP gradually increased from Rs billion during to Rs billion forshowing a cumulative increase of over percent; FBR collection during increased to Rs. On positive note, FBR tax collection exceeded the target of Rs. It In fact, public debt to GDP has reduced when compared with over percent in to around percent in indicating reduction in public debt burden of the country; The analysis of public debt to GDP ratio during last years reveals that in the period of high inflation, public debt to GDP ratio performed relatively better as the denominator becomes larger and this ratio mostly hovered close to 60 percent even when real GDP growth was merely half a percent e. Further, credit rating agencies in their recent reports acknowledged this fact that Pakistan external debt is on sustainable path and there is very little exposure to medium term vulnerabilities; The domestic debt is perpetual depict nature and is constantly refinanced through new issues. Government conducts three auctions in the domestic market per month, one for investment bondsof various maturities 3 years or more and two auctions for treasury bills of maturities of 3, 6, and 12 months. Domestic market both primary and secondary are very well developed and established in Pakistan and as such the government does not feel any cause for concern with regard to refinancing its domestic debt which is also evident from the fact that the yield curve of short term and long term debt have both been declining steadily for over past one year and the yield curve is flattening across the maturity profile which again is a sign of stability. Further, interest payments on domestic debt as percentage of GDP are moderate at around 4 percent The critical consideration in debt management is the sustainability analyses for which various indicators have been designed. Furthermore, public spending in low interest rate environment is always beneficial as long as it is not crowding-out private sector credit which definitely is not happening in Pakistan The above facts clearly establish the fallacious views mentioned in the news item regarding the state of economic performance and public debt management in Pakistan. The writer is referring to total external debt and liabilities of the country, which includes debt of private entities that by definition are not public external debt since the government is not liable to pay these obligations. It includes debt of private businesses and banks etc. It In fact, external public debt to GDP has declined from around 34 percent in to around percent in indicating reduction in external public debt burden; The news report made a false claim that the government is paying over 8 percent to banks on treasury bills. The actual cost on treasury bills currently stood at around percent; The news report does not show correct understanding of the mechanism of setting return on national savings schemes. Projected principal repayments to the IMF for the EFF are stretched over a longer timeframewith the final payment due in Repayments for Official Development Assistance from the Paris Club begin inbut stretches over a 23-year period. In fact, the Debt Policy Coordination Office is actively involved in debt management of Pakistan by publishing periodic reports such as debt policy statements, fiscal policy statements, execution and implementation medium term debt management strategy, risk management reports and plays advisory role in debt management operations including both domestic and external loans. The Debt Policy Coordination Office has successfully done second re-profiling of domestic bond portfolio which not only resulted in higher average life to maturity but also at around half the cost. The professional staff has already been inducted with an approach to continuously strengthen the functions of the office. Since this office deals with primary and secondary debt markets, hence the staff need financial and treasury market background more than economics. Any desired economic policy input is obtained from Economic Advisory Wing with which the office works very closely combined with in-house economists. The writer is referring to total external debt and liabilities of the country which includes debt of other sectors which by definition are not considered as public external debt since the government is not liable to pay these obligations. It includes debt of private sector and banks etc. In this regard, the news article acknowledges this fact that the external debt to GDP ratio remained more or less constant since In fact, external public debt to GDP has reduced from 21 percent in to 20 percent in indicating reduction in external public debt burden; The news article claims that component of public debt has increased to 85 percent of total external debt and liabilities which is incorrect. Further, credit rating agencies in their recent reports acknowledged this fact that Pakistan external debt is on sustainable path and there is very little exposure to medium term vulnerabilities The news article claims that reliance on external borrowing for the purpose of financing the fiscal deficit has reached at a peak of almost percent in which is incorrect as the correct number stood below percent. Further, news article claim regarding virtually no external borrowing to finance fiscal deficit in indicates lack of sufficient external inflows which also put extra pressure on domestic resources. Therefore, news article apprehension in this regard is incorrect The above facts clearly establish the fallacious views mentioned in the news item regarding the state of public debt management in Pakistan. All guests who participate the event will receive a warm welcome from Pakistan as it is the host country Rebuttal - News report titled "Govt. Moreover, while negotiating the Fund program, government generally takes conservative estimates so that the commitments made by it are fully achieved PSDP includes development allocations for both the federal and the provincial governments. The facts remains that ground realities are not changed though assumptions It is also important to mention here that IMF does not force any country to take loan from it. And in doing so, countries could lose their growth momentum in the short run Similarly, other international financial institutes and foreign investors show their confidence into that economy which is in agreement with the IMF. The suspension of the programme posed negative impact on the economy Inflation had averaged around 12 percent. Foreign exchange reserve dropped significantly Soon after assuming the charge, the present government laid out comprehensive agenda of reforms to reinvigorate the economy, spur growth, maintain price stability and rebuild the key infrastructure of the economy through removal of bottlenecks like, energy shortages, bleedings PSEs and circular debt along with creating conducive investment climate to boost exports and tax revenues, and bridge fiscal and current account deficits. Pakistan entered into EFF program which is now being successfully completed The present government initiated reforms on multiple dimensions with comprehensive execution plan for all sectors of the economy. The CAD has been contained below the target Economic growth is projected to continue its upward acceleration in coming years. The midterm budgetary framework has set timelines for achieving high growth rates gradually steering it over percent through various infrastructure projects including building of roads, rail networks, telecommunications, special economic zones, development of Gawadar Port and major projects for additional power and improvement in power transmission sub-sector Government has pursued actively to resolve the energy crisis and succeeded in improving the situation for all consumers in the country. Pakistan benefits from disbursements from multilateral and bilateral partners, which are expected to continue beyond the ongoing program, and has access to international markets, which limits short and medium-term financing risks. Further, debt burden of country is only understood in comparison to its relation with the GDP instead of absolute debt numbers. The external debt as a percentage of GDP stood at percent as at end June and expected to be percent at the end of as per IMF Projections. The response on this is as follow Advances for direct Taxes in 4th Quarter Higher collection of customs duties realized due to essential items Adoption of Expenditures submitted in the Indian Budget Input tax adjustments are used as justification for withdrawal by FBR of provincial tax on services input tax invoicing in federal GST on goods The unusual methodology adopted for zero rating sales tax in five export oriented sectors by removing GST on inputs is subject to leakages Advances for direct Taxes in 4th Quarter to meet the target FY The author has claimed that growth in income tax was only 13 percent in first nine months and this rose sharply to 29 percent in the 4th quarter, thereby creating the suspicion that taxes have been collected in advance from some entities. Besides these goods, import of pesticide was also subject to zero percent customs duty during the financial year The collection of customs duty increased mainly due to phasing out of non-essential exemptions, improving administrative mechanism and coupled crackdown on smuggled goods in the country Adoption of Expenditures submitted in the Indian Budget It is clarified that every year tax expenditures are published in Pakistan Economic Survey before the Budget and is made available both in printed form and on the website of Finance Division. The practice prevalent in Pakistan also ensures full transparency Input tax adjustments are used as justification for withdrawal by FBR of provincial tax on services input tax invoicing in federal GST on goods The FBR is aware that VAT works best when input tax adjustments are allowed. Further, this measure has been adopted under compulsion and not as a choice as the settlement mechanism with the provinces was not working The unusual methodology adopted for zero rating sales tax in five export oriented sectors by removing GST on inputs is subject to leakages As far as zero rating of imported goods and their misuse is concerned, it is clarified that a mechanism in FBR is available to control the misuse of zero rating facility. In this regard, the the government agencies are making all out efforts for linking the new generation projects to the national grid With regards to comments about development spending cuts leading to delay in implementation of CPEC, it is important to clarify that the majority of projects to be implemented under CPEC are to be financed by the private sector and are not dependent on government investment. The claim by contributor of the report that government missed all financial targets is incorrect The Industrial Sector recorded growth of percent against the target of percent. STPF for export promotion is a welcome development The writer has stated that government revenue collection of Rs. The ECC during discussions in meeting held on enhanced value of package to Rs billion in order to provide greater relief to consumers The spokesman further said it is correct that an allocation of Rs billion has been made in the budget for the current financial year. An amount of Rs million has already been released to USC for clearance of arrears of the yearsand The balance allocation will be used for Ramadan Package and clearance of remaining arrears Therefore, there is no question of scaling down the Ramadan Package. In fact, they have no role in the core functions of the Ministry of Finance The spokesman added that story being spread is anonymous and lacks any credibility whatsoever. Clarification - No decision, instructions for payment of Rs billion to MNAs - Spokesman Ministry of Finance The spokesman of Finance Ministry has stated that there is no truth in the reports that the Prime Minister has directed the Ministry of Finance to arrange payment of Rs billion to MNAs for development schemes in their constituencies He said that the contents of the news, reported in a section of the press are unfounded and not based on facts.
Dolphins often work as a team to harvest fish schools, but they also hunt individually.
The second setting is one in which all of the outcome data is already available, and the goal of the matching is to reduce bias in the estimation of the treatment effect.
His next album, Thriller, became the best-selling album by any artist of any race in the history of the music industry.
For OS earlier than Windows XP which you have previously change the permissions for the registry key, quit Regedit.exe and start Regedt32.exe, and change the permissions back to the previous setting for Administrators (which should be Read Only).
Stop-signal delay was not significantly different between groups, and.