ISLAMABAD: Pakistan’s tax-to-GDP ratio rose to 10.8% in the second quarter of the 2024-25 fiscal year, a statement from the Senate Standing Committee on Finance and Revenue said on Thursday, below the target of 13.6% agreed with the International Monetary Fund (IMF) when it approved a $7 billion bailout loan for the cash-strapped country last year.
The South Asian nation is navigating a challenging economic recovery path buttressed by the 37-month loan program that comes with tough measures especially on the taxation front, such as broadening the tax base to include previously undertaxed sectors such as agriculture, industrialists, and developers, abolishing exemptions and bringing the retail, agriculture, and export sectors into the normal income tax regime and imposing new taxes on the construction and sale of buildings and plots, and on milk and lubricating oil.
The bailout has also called for increasing the tax rate on farm income, continuing fiscal consolidation to reduce the deficit and improve fiscal discipline, improving tax administration and compliance, strengthening federal-provincial institutional arrangements and improving public investment management.
“The tax-to-GDP ratio has risen to 10.8% in the second quarter [of FY24-25], up from 9.5% in the first quarter, although it remains below the IMF-agreed target of 13.6% by the end of the program,” said a press release after the Senate Standing Committee on Finance and Revenue met on Thursday. “By comparison, India’s tax-to-GDP ratio stands at 18%.”
During the meeting, the committee was briefed on Pakistan’s current revenue shortfall of Rs384 billion for the first half of the fiscal year. The FBR collected Rs5,624 billion in taxes, falling short of the targeted Rs6,008 billion.
Senator Saleem Mandviwala, the chair of the committee, expressed concerns over the Federal Bureau of Revenue’s handling of sales tax collection.
Finance Minister Muhammad Aurangzeb responded by highlighting ongoing reforms, including a move to simplify income tax forms for salaried individuals and a push for transparency in tax collection through technological innovations.
Aurangzeb also discussed the government’s intention to separate tax policy from FBR operations in the next financial year, aiming to ease the burden on the salaried class.
“We are taking steps to keep the tax form simple and easy,” he added.
The committee also stressed the need for reforms to reduce the administrative burden on taxpayers while ensuring that tax collection remained “efficient and fair.”
The possibility of converting certain taxes into a carbon tax, a proposal raised by Senator Sherry Rahman, was also discussed.
“While the finance minister acknowledged the World Bank’s 10-year $20 billion Country Partnership Framework, which includes climate and carbon concerns, some members, including Senator Farooq H. Naik, raised concerns about the impact of a carbon tax on inflation and its effect on the poor,” the statement said.
Under the IMF deal, the highest effective tax rate on farm income can rise to as much as 45% from the current 15%. It will be implemented from this year, a move that was termed “unprecedented” by brokerage and investment banking firm JS Global at the time the loan was approved last year.
“These changes could contribute to inflation, particularly in food prices, affecting consumers nationwide,” said Ghasharib Shaokat, head of product at Pakistan Agriculture Research, adding that larger farmers will be affected more.
Inflation averaged close to 30% in FY23 and 23.4% in FY24, which ended on June 30. The consumer inflation rate slowed to 4.1% year on year in December, the lowest in more than 6.5 years.
Prime Minister Shehbaz Sharif’s government is based on a weak coalition and faces political pressure from the party of popular jailed opposition leader, former premier Imran Khan.
But Sharif says his government is committed to the tough but unavoidable reforms mandated by the IMF.
Pakistan has been struggling with boom-and-bust cycles for decades, leading to 22 IMF bailouts since 1958.
Pakistan tax-to-GDP ratio rises 10.8% in FY25 second quarter, below IMF target
https://arab.news/jcu23
Pakistan tax-to-GDP ratio rises 10.8% in FY25 second quarter, below IMF target
- Pakistan navigating challenging economic recovery path buttressed by $7 billion IMF program that comes with tough measures
- Senate Standing Committee of Revenue expresses concerns over Federal Bureau of Revenue’s handling of sales tax collection
Authorities recover 20,000 soap bars for anti-polio campaigns being sold illegally in Peshawar
- Provincial authorities seize large stockpile of soap bars provided by UNICEF in Peshawar’s Sabzi Mandi area
- UNICEF says authorities have not ruled out possibility of collusion by insiders or lapses in oversight mechanism
PESHAWAR: Pakistani authorities on Wednesday recovered 20,000 soap bars provided by the United Nations International Children’s Emergency Fund (UNICEF) for exclusive use in anti-polio campaigns after they were found being illegally sold in the northwestern Peshawar city, the UN agency said.
Authorities seized the soap bars in a raid conducted at the city’s famous Sabzi Mandi area, with UNICEF raising serious concerns about the diversion of humanitarian supplies to the open market.
“The seized consignment included approximately 20,000 soap bars, reportedly marked for exclusive use in Polio Campaigns,” the UN agency said.
UNICEF said provincial officials believe it is highly unlikely that such a large-scale misappropriation could have occurred without either the “active involvement or gross negligence” of personnel within the provincial Health Department and UNICEF’s local and national operations.
“Further investigations are underway to determine how the supplies were diverted from official distribution channels to Open Market,” the statement said. “Authorities have not ruled out the possibility of collusion by insiders or lapses in oversight mechanisms.”
UNICEF said the incident underscored the critical need for greater accountability and monitoring in aid distribution processes, particularly in sensitive public health programs like the polio eradication campaign.
Polio is a paralyzing disease with no cure, making prevention through vaccination critical. Multiple doses of the oral polio vaccine, along with the completion of the routine immunization schedule for all children, are essential to build strong immunity against the virus.
According to Pakistan’s polio program, 10 cases have been confirmed so far this year, with 74 reported in 2024.
Pakistan, one of the last two countries where polio remains endemic, has made significant progress in curbing the virus, with annual cases dropping from around 20,000 in the early 1990s to just eight in 2018.
The country reported six cases in 2023 and only one in 2021.
Trump praises ‘very impressive’ Pakistan army chief, reiterates trade stopped Indo-Pak conflict
- US president hosted Field Marshal General Asim Munir for lunch at White House last week
- Trump announced a ceasefire between India and Pakistan last month after military standoff
ISLAMABAD: US President Donald Trump praised Pakistan’s army chief on Wednesday, describing him as “very impressive” while reiterating his earlier claim of preventing a nuclear war between Islamabad and New Delhi with trade deals last month.
Trump hosted Field Marshal General Asim Munir for lunch last Wednesday in an unprecedented White House meeting. The American president had told reporters he was “honored” to meet the Pakistani general and that the two discussed the Iran-Israel conflict.
Nuclear-armed India and Pakistan engaged in a days-long military conflict before Trump announced a ceasefire between the two on May 10. Trump has repeatedly said he offered to help both nations with trade if they agreed to de-escalate.
At the NATO summit in The Hague, Trump was asked by a reporter why he had failed to stop the ongoing military conflict between Russia and Ukraine. The American president responded by saying he had stopped wars between Iran and Israel as well as India and Pakistan, saying the conflict “was getting very bad” between the nuclear-armed rivals.
“And in fact I had the general, who was very impressive, the general from Pakistan was in my office last week,” Trump said.
He described Indian Prime Minister Narendra Modi as a “great man, a great gentleman,” saying Washington helped both countries reason with each other at the height of the conflict.
“I said we’re not going to do a trade deal if you’re going to fight and if you’re going to fight each other we’re not doing a trade deal and you know what, they said, ‘No, I want to do the trade deal.’ And we stopped a nuclear war.”
Pakistan’s government last week announced it would formally nominate Trump for what it called his “decisive diplomatic intervention” during the military standoff with India in May.
The American president has also previously offered to mediate the decades-old Kashmir dispute between India and Pakistan, who both claim the disputed Himalayan region in full but administer only parts of it.
While the ceasefire continues to persist, tensions simmer as New Delhi refuses to budge from its stance of suspending a decades-old water-sharing treaty with Pakistan.
Pakistan has said any attempts to stop or divert its flow of water by India will be regarded as an “act of war” and will be responded to with full force.
Pakistani exporters bank on Middle East to export 125,000 tons of mangoes this season
- Pakistani fruit exporters association hopes to earn $100 million from total mango exports from May to September
- Mango exporters, farmers say recent regional tensions and adverse climate conditions impacting fruit’s production
ISLAMABAD: A leading Pakistani fruits exporters association said on Wednesday it has set an ambitious target of exporting 125,000 tons of mangoes from May to September this year to earn $100 million in revenue, hoping to export 70 percent of these to markets in the Middle East.
Pakistan is the world’s fourth-largest mango producer, with the fruit’s exports generating millions of dollars in revenue annually, according to the Pakistan Fruit and Vegetables Export Association (PFVEA).
Pakistan’s 20 varieties of mangoes come second only to oranges as the most-produced fruit in the country. The country produces around 1,800,000 metric tons of mangoes annually, with 70 percent grown in Punjab, 29 percent in Sindh and 1 percent grown in Khyber Pakhtunkhwa.
“Pakistan is aiming to export 125,000 tons of mangoes this season, 25 percent more than last year’s target of 100,000 tons, with exports having started on May 25 and continuing until the end of September,” PFVEA Patron-in-Chief Waheed Ahmed told Arab News.
“We are hoping to export 70 percent of this target to Middle Eastern countries, our largest market, and if achieved, the country is expected to earn an estimated $100 million in foreign exchange,” he added.
However, Ahmed warned adverse effects of climate change may impact the amount of mangoes Pakistan produces this year.
Pakistan, which has faced irregular weather patterns ranging from heat waves and unusually heavy rains, is frequently ranked among the most adversely affected countries due to climate change effects.
Mango production has been on the decline in Pakistan for the past three consecutive years.
“Mango production in Pakistan is consistently declining due to climate change and water scarcity and there is a risk of up to 25 percent reduction in total mango production this year as well,” Ahmed warned.
After the projected decline, the PFVEA official said this season’s total mango production may come down to around 1.4 million tons
“However, we have increased the export target because we are exporting only 125,000 tons out of the estimated 1.4 million tons, so we remain hopeful of achieving it despite all challenges,” Ahmed said.
Ahmed called for interventions such as improved water management, production of climate-resilient mango varieties, research and development and modernization of agriculture and horticulture.
He said efforts were underway to boost mango exports to non-traditional markets such as Japan, the United States, South Korea and Australia, with a special focus on expanding exports to Turkiye and China.
He noted that regional tensions, particularly Pakistan’s conflict with India and the Israel-Iran tensions, have led to higher export costs due to additional charges by shipping companies on Pakistani cargo.
“We urge the Federal Ministry of Commerce and the Ministry of Maritime Affairs to intervene and eliminate these extra charges to help improve export competitiveness,” Ahmed said.
Farmers and exporters agreed adverse climate conditions had affected not only the volume of production but also the quality of mangoes.
“We have been facing losses due to multiple factors, including low yield and lower-than-expected demand caused by conflicts in the Middle East,” Asif Ahmed, an exporter from Iftikhar Ahmed & Co, told Arab News.
Asif, who has been exporting mangoes for over six decades, hoped the Iran-Israel ceasefire would improve the situation and that fruit prices would rise to help cover the losses.
“We have farms in Sindh’s Tando Allahyar and Mirpur Khas districts where production was almost around 30 percent less than normal this year,” Asif said.
Amjad Hussain, an exporter from Punjab’s Multan city, agreed climate change had reduced the size of the mangoes and their quality as well.
“It has affected more than 25 percent of our yield, which will reduce our exports, though the exact figure will be clear by September,” Hussain said.
Pakistan, UAE agree to strengthen cooperation during Bilateral Political Consultations
- Both sides agree to maintain momentum of high-level exchanges, institutional engagements, says Pakistan’s foreign office
- UAE is Pakistan’s third-largest trading partner after China and the United States, and a major source of remittances for it
ISLAMABAD: Pakistan and the United Arab Emirates (UAE) on Wednesday agreed to strengthen cooperation in multiple sectors as the two sides took part in the second round of Bilateral Political Consultations (BPC) in Abu Dhabi, Pakistan’s foreign ministry said.
Pakistan and the UAE held their inaugural BPC session in 2020. The BPC is another forum for strengthening cooperation between the two countries that enjoy cordial ties rooted in shared faith, culture, economic, trade and investment ties.
In the second round of the consultations, Pakistan’s delegation was led by Shehryar Akbar Khan, the additional foreign secretary (Middle East), while the UAE was led by Reem Ketait, the deputy assistant minister for political affairs.
“During the consultations, both sides reviewed the entire spectrum of bilateral relations and reaffirmed their resolve to further strengthen cooperation across multiple sectors,” Pakistan’s foreign ministry said.
“The two sides discussed regional and global developments of mutual interest and reiterated their commitment to enhanced coordination and dialogue at multilateral forums.”
Khan stressed further deepening fraternal ties between Pakistan and the UAE while both sides appreciated the positive trajectory of bilateral ties. Pakistan and the UAE also expressed satisfaction at the progress made under existing institutional mechanisms, including the Joint Ministerial Commission (JMC) and regular leadership-level exchanges, the statement said.
“The Bilateral Political Consultations concluded with both sides agreeing to maintain the momentum of high-level exchanges and institutional engagements, and to convene the next round of consultations in Islamabad on mutually agreed dates,” the foreign ministry said.
The UAE is Pakistan’s third-largest trading partner after China and the United States. More than 1.5 million Pakistanis live and work in the UAE, sending back over $5 billion in remittances annually.
Bilateral trade reached approximately $10.9 billion in fiscal year 2023–24, including $2.08 billion in exports and $6.33 billion in imports, according to official Pakistani data.
Last year, the UAE pledged $10 billion in future investments in promising sectors of Pakistan’s economy.
Pakistan approves $42 million to transform ship-breaking yard into ‘model green facility’
- Gadani in southwestern Pakistan once used to be world’s main destination where old ships were dismantled
- Transformation essential to reduce pollution, manage hazardous waste responsibly, says maritime affairs minister
ISLAMABAD: Pakistan’s government has approved Rs12 billion [$42 million] to transform a key ship-breaking yard in the country’s southwestern Balochistan province into a “model green facility” to reduce pollution and manage hazardous waste, the maritime affairs ministry said on Wednesday.
Gadani in Balochistan once used to be one of the world’s main destinations for end-of-life vessels. Here, old and decommissioned ships were regularly dismantled and their parts, especially steel, were recycled, reused or resold.
Business at the shipyard has declined in recent years as Pakistan navigates a tricky path to recovery from a prolonged macroeconomic crisis. The ship-breaking industry has also taken a hit due to worldwide calls to stop beach scrapping because of the danger and environmental damage from pollutants left to drain into the sea. Workers, earning as little as $4 a day here, face health hazards such as exposure to lead paint and asbestos when working on ships.
“Federal Minister for Maritime Affairs, Muhammad Junaid Anwar Chaudhry has announced the approval of Rs12 billion for the transformation of Gadani Ship-Breaking Yard into a model green facility, aligning the maritime sector with international climate and environmental standards,” the ministry said.
Chaudhry, chairing a meeting to discuss the ship-breaking yard, stressed the need for ship recycling to evolve to meet global sustainability standards. He added the transformation is essential to reduce pollution, manage hazardous waste responsibly and contribute to a greener maritime future.
“The minister said this major initiative focuses not only on modernizing infrastructure and safety mechanisms but also on addressing the climate crisis through green shipping and environmentally responsible ship recycling,” the statement added.
Pakistan is consistently ranked among the world’s worst-affected countries due to climate change effects. Pakistan has regularly experienced irregular weather patterns such as heatwaves and unusually heavy rains that have triggered flash floods across the country.
Syed Zafar Ali Shah, the secretary of maritime affairs, said a 30-bed hospital, residential blocks for medical staff and labor colonies will be constructed as part of the social uplift component of the project.
The official said that 32 kilometers of road, a school, a public park and modern water supply and treatment systems will be installed to support the workforce and local community in Gadani as part of the project.
Pakistan became a party to the 2009 Hong Kong Convention in December 2023, which aims to improve hazardous working conditions in ship recycling facilities worldwide.
The minister stressed that the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) must be strictly observed. He instructed authorities to put in place a “robust monitoring mechanism” to ensure transparency and timely implementation of the project.
Chaudhry noted that Gadani produces over 1.2 million tons of steel annually, making it a critical part of Pakistan’s scrap and steel supply chain.
“Gadani was once among the world’s largest ship-breaking hubs,” Chaudhry noted. “Today, it stands at a crossroads— either we modernize it in line with green shipping goals or risk further decline.”
