Finance Minister Miftah Ismail Tuesday said that with increased hydelpower, lower energy demand, and lower oil prices, Pakistan may even have abalance of payments surplus in the coming months.
The minister expressed these views during a meeting hosted by PakistanStock Exchange (PSX). Speaking on the occasion the minister said thatmacroeconomic stability was forthcoming with the International MonetaryFund (IMF) programme resuming before the end of August as allconditionalities have been met.
PSX Chairperson Dr. Shamshad Akhtar, SECP Chairman Aamir Khan, PSX MD & CEOFarrukh H. Khan, FBR, Chairman Asim Ahmad, SBP Deputy Governor Dr. InayatHussain, Special Secretary Finance Awais Manzoor, and key stakeholdersincluding Arif Habib Group Chairman Arif Habib, Pakistan Stock BrokersAssociation (PSBA) & AKD Group Chairman Aqeel Karim Dhedhi, Bank AlfalahLimited CEO Atif Bajwa, NBP Funds CEO Dr. Amjad Waheed, Arif HabibCorporation Director Nasim Beg, and Pakistan Business Council (PBC) CEOEhsan Malik participated in the meeting.
With regard to tax measures, the minister stated, “Fiscal discipline willbe strictly followed and all additional expenditures will be fully fundedby tax measures. 10 percent Super Tax is only imposed for one year whilealternative revenue streams are developed. Advance-to-deposit ratio(ADR)-linked tax on banks will not be imposed retrospectively and taxrevenues from the retail sector are expected to be significantly morecompared to last year.”
The meeting involved a discussion on proposals presented by PSX to thefinance minister for the sustainable development of the capital markets.This follow-up meeting came on the heels of the visit of the financeminister to PSX last Friday. The PSX MD re-emphasized that the situation inthe capital markets needs to be addressed on a war-footing.
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The participants urged that the payout ratios of profitable state-ownedenterprises (SOEs) should be raised to 50 percent. Given the imminent boardmeetings, there was an urgency for guidance for SOEs to declare healthydividends, which would result in dividend income and tax revenue for thegovernment, giving it fiscal space for reducing circular debt as well. Thefinance minister agreed and directed that a meeting be held immediatelywith the relevant ministry and all relevant stakeholders to consider thismatter.
The participants also pointed out that the market valuations presentedcompelling opportunities for entities like State Life Corporation andEmployees’ Old-Age Benefits Institution (EOBI) to invest in listed equitiesfor the benefit of their policyholders and pensioners.
In terms of the macroeconomic situation prevailing in the country, theparticipants emphasized that the government’s funding should be strong andtaxation measures should be equitable. Movements in PKR/USD exchange ratehave been too volatile and changes to this effect should be gradual. Withregard to the interest rates, it was pointed out that interest rates inalmost all countries of the world are negative and this must be taken intoaccount in the context of interest rates in Pakistan.
