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Pakistan domestic, external debt to witness a substantial increase in FY25

Pakistan domestic, external debt to witness a substantial increase in FY25

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Pakistan domestic, external debt to witness a substantial increase in FY25

The International Monetary Fund (IMF) and Pakistan are currently also deliberating upon a framework concerning new government borrowings, as both the sources in finance ministry and the Washington-based lender fear an increase in loans in the next budget covering the fiscal year 2024-25.

Read more: More gas tariffs hikes planned as Pakistan eyes another IMF programme

Hence, the sources say that Pakistan could borrow from domestic and external sources another Rs10,433 billion – a massive amount that will propel the total debt burden to Rs87,346bn.

Out of this total, the sources say, domestic borrowing will witness an increase of around Rs7,636bn while external debt can jump by Rs2,797bn in 2024-25.

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Thus, the addition of these amounts will raise the total domestic debt to Rs53,878bn and the overall external debt Rs33,648bn.

Previously, it was reported that the government economic team has given an initial estimate of external financing of around $22 billion for the next fiscal year.

Read more: Pakistan external financing needs estimated at $22bn, lower power tariffs proposed for industries

As far as the current fiscal year is concerned, the sources are expecting domestic debt to reach Rs76,913bn by the time 2023-24 ends on June 30, as high interest rates are further worsening the already complicated debt repayment equation for Pakistan.

Read more: Govt bonds are borrowing instruments. High interest rates means more deficit

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On the other hand, external debt will jump to Rs30,671bn at a time when Pakistan is trying its best to revive economy amid record high interest rates.

The Pakistani authorities have also shared a macroeconomic framework for the next fiscal year with the IMF mission during the ongoing talks, sources say, with an estimated GDP growth rate of 3.7 per cent and inflation rate dipping to 11.8pc.

Read more: Pakistan sees 2024-25 inflation at 11.8pc, IMF thinks it will be 12.7pc

However, the IMF thinks that the GDP will grow at a slightly lower pace of 3.5pc while inflation is going to stay at 12.7 pc – a projection that is 0.9pc higher than the suggested by the Ministry of Finance.

Earlier this week, the IMF and Pakistan started policy-level talks, as the cash-starved Islamabad is looking forward to clinch another deal with the Washington-based lender while meeting all the tough conditions being attached to it.

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

Budget 2024-25: Sindh announces up to 30pc increase in salaries

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Budget 2024-25: Sindh announces up to 30pc increase in salaries

The Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

Chief Minister Murad Ali Shah, who also holds the portfolio of finance minister, presented the budget in the provincial assembly on Friday. 

He said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees. 

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Presenting the budget with a total outlay of Rs3,352 billion, he said, the government had decided to allocate Rs959 billion for development projects.

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

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Rs37,000 minimum wage: Sindh follows in the footstep of federal govt, Punjab

The Sindh government has revised the minimum wage for unskilled labourers to Rs37,000 in line with decisions of the federal and Punjab governments. 

The minimum salary has been increased by Rs5,000 as previously it stood at Rs32,000. The proposal was laid forth by Chief Minister Murad Ali Shah while presenting the budget for the fiscal year 2024-25. 

Meanwhile, the Sindh government has proposed up to 30 percent increase in salaries of its employees in the budget for next fiscal year 2024-25. 

The chief minister said the government had proposed 30pc increase in salaries of officials from Grade 1 to 6, adding that there was 25pc increase for officials of Grade 7 to 16. Similarly, officers from Grade 17 to 22 would get 22pc hike in their salaries. 

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Furthermore, the provincial government has propsed 15pc increase in pension of the retired employees.

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Budget 2024-25: Let’s figure out the cost of essentials

Budget 2024-25: Let’s figure out the cost of essentials

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Budget 2024-25: Let's figure out the cost of essentials

The federal government has announced a staggering Public Sector Development Programme (PSDP) worth Rs1,500 billion. 

According to the budget document, all federal divisions have been allocated budget, except the Poverty Alleviation and Special Safety Division, which deals directly with matters concerning 95 million people who are living in abject poverty. 

Sadly, the Poverty Alleviation and Special Safety Division gets nothing in the PSDP 2024-25. 

Worse still, the Ministry of Poverty Alleviation and Social Safety does not have any minister as its head, rendering it almost moribund for more than 10 months. Earlier, Dr Sania Nishtar was chairing it during the PTI government, followed by Shazia Marri during the PDM government. 

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Last year, 12.5 million people slipped into poverty, which took it from 34.2pc to 39.4pc, according to the World Bank. 

The government has conveniently ignored the poor in the budget. Other than announcing Rs598.71billion under the Benazir Income Support Programme (BISP), no substantial amount has been earmarked for reducing poverty. 

Your next read: BUDGET 2024-25 – A LAYMAN’S GUIDE 

Analysts believe that 27 percent increase in BISP from Rs471.3 billion to Rs598.71 billion has been made to placate the Pakistan Peoples Party, which may take the wind out of PML-N’s sails anytime. 

BURGEONING TAXES 

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On the other hand, if we delve into the details of burgeoning taxes, Sales Tax stands out in afflicting the poor the most. 

Now a sales tax of 10pc will be charged on stationery items. 

Tribal area residents who have been experiencing extreme poverty will now have to pay 6pc tax on the supply and import of plant machinery as well as electricity on both residential and commercial connections. 

Following the similar trajectory, a 10pc sales tax will be charged on the local supply of vermicelli, buns, poultry feed, cattle feed, sunflower seed meal, newsprint, books, oil cakes and tractors. 

On mobile phones whose value is less than $500 (Rs139,240), 18pc tax has been imposed. If the value of purchased phone exceeds $500, an existing rate of 25pc will remain unchanged. 

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Earlier, the retailers of leather and textile products who paid 15pc sales tax will now have to pay 18pc tax. 

Drug prices will increase massively as the sales tax on raw materials used in production of pharmaceutical items has been raised to 18pc from 1pc. This will be applicable on medical treatment, diagnostic equipment, heart surgery, neurosurgery, electrophysiology, endoscopy, endosurgery, oncology, urology, gynaecology, disposables and other medical equipment.

Besides, 20pc sales tax on import of syringes, needles, catheters, cannulae, blood collection tube of glass and blood collection tube of PET.

Moreover, charitable hospitals with 50 or more beds will pay 18pc sales tax on imported medical goods. 

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