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Express Tribune
11-06-2025
- Business
- Express Tribune
PRAC criticises missed opportunities in budget
Listen to article The Policy Research and Advisory Council (PRAC) has acknowledged several positive measures in the federal budget for 2025-26, but has raised significant concerns about the budget's failure to address critical challenges, particularly in the industrial sector, which could increase unemployment and destabilise Pakistan's already fragile economic outlook. In a statement, PRAC Chairman Mohammad Younus Dagha acknowledged the budget's forward-thinking initiatives, including the Green Sukuk, which signals a positive shift towards sustainability and reflects the government's commitment to addressing environmental concerns. He also welcomed the tax relief for salaried individuals, noting it would offer financial relief to the broader population. However, he pointed out that the lack of an increase in the minimum tax threshold may not sufficiently ease the burden on the most vulnerable and heavily taxed segments. Additionally, the reduction in withholding taxes on property transactions by 1.5% across all tax brackets and the removal of 7% federal excise duty on property transfers are expected to stimulate the real estate and construction sectors. PRAC expressed concerns about the budget's failure to address the pressing economic challenges. The most significant issue raised was the budget's reliance on unrealistic revenue targets and growth projections, which Dagha described as "disconnected from economic realities."
Business Recorder
11-06-2025
- Business
- Business Recorder
‘Disconnected from economic realities': think tank says budget could increase unemployment
The budget has failed to address critical challenges, particularly in the industrial sector which could increase unemployment and destabilize Pakistan's already fragile economic outlook, according to the Policy Research and Advisory Council (PRAC). In a statement published on Tuesday, PRAC Chairman Mohammad Younus Dagha acknowledged the budget's forward-thinking initiatives, including the Green Sukuk, which he said signals a positive shift toward sustainability and reflects the government's commitment to environmental concerns. Post-budget presser: Aurangzeb addresses key concerns He lauded the reduction of withholding taxes on property transactions by 1.5% across all tax brackets and the removal of the 7% Federal Excise Duty on property transfers as this is expected to stimulate the real estate and construction sectors. He also welcomed the tax relief for salaried individuals. However, he said the lack of an increase in the minimum tax threshold may not sufficiently ease the burden on the most vulnerable and heavily taxed segments. Moreover, he said the budget is relying on unrealistic revenue targets and growth projections, and is 'disconnected from economic realities.' He emphasized that the ambitious projections ignore prevailing macroeconomic constraints, which could lead to 'unachievable expectations and exacerbate the nation's fiscal challenges.' Budget is 'death knell' for IT industry: P@SHA He added that the budget also raised alarm over the country's fiscal health, particularly with regard to debt servicing, which is projected to consume 50.4% of the current expenditure and 74.1% of net federal revenues in FY26. 'This severely limits the resources available for developmental spending,' it said. It said the Federal Public Sector Development Program's reduction by 29%, from PKR 1,400 billion to PKR 1,000 billion for the upcoming fiscal year, 'will undermine crucial initiatives, slow job creation, and hinder long-term economic growth.' 'By slashing development spending, the government risks undermining long-term economic progress and stability,' said Dagha. 'The reduction in PSDP funding directly contradicts the need for investment in infrastructure, education, and healthcare.' PRAC also expressed concern over the lack of targeted support for the industrial sector, which it said has experienced a 1.5% decline during the first nine months of FY2025. Moreover, it said despite the widening trade deficit in services, the budget has failed to announce special incentives for Pakistan's thriving IT sector, missing an opportunity to leverage its potential for economic growth. Similarly, no export-oriented growth measures were introduced, 'a critical oversight in boosting foreign exchange earnings and strengthening the country's economic stability.' Meanwhile Dagha highlighted the insufficient allocation for Karachi, which now ranks as the fifth least livable city globally. 'With only PKR 3.2 billion allocated for the K-IV water supply project, a vital initiative to address the city's ongoing water crisis, the budget allocation is deemed inadequate,' the statement said, adding that several key projects under the Karachi Transformation Plan, announced in 2020, remain largely unaddressed. 'This was a rare opportunity to implement transformative reforms in critical areas such as education, healthcare, and infrastructure,' said Dagha. 'Regrettably, the budget largely missed the chance to enact meaningful reforms in these vital sectors.' PRAC has urged the government to reconsider the budget and introduce measures that can effectively address the economic realities of Pakistan. 'There is an urgent need for a more balanced approach that focuses on sustainable growth, fiscal responsibility, and targeted support for key sectors such as industry, technology, and social welfare,' it said.
Business Recorder
09-06-2025
- Business
- Business Recorder
Pakistan secures over $1.5 billion for climate action amid rising environmental pressures
Amid intensifying climate risks, Pakistan has mobilized over $1.5 billion in climate finance to combat environmental degradation and build resilience, according to the Pakistan Economic Survey 2024-25. The funding includes $1.4 billion under the IMF's Resilience and Sustainability Facility (RSF) and $82 million from the Green Climate Fund, alongside the launch of a Rs30 billion Green Sukuk and the National Climate Finance Strategy. These investments back a sweeping set of initiatives, including the National Adaptation Plan – endorsed by the federal cabinet – which lays out 117 adaptation measures across six vulnerable sectors. Projects like Recharge Pakistan, a $77 million program for ecosystem-based flood management, and the Pakistan Glacier Protection Strategy are central to the country's climate resilience roadmap. Despite contributing less than 1% of global emissions, Pakistan is bearing a disproportionate burden of climate change. The State of the Pakistan Climate 2024 reported a 31% spike in average rainfall and a national temperature rise to 23.52°C, with Sindh and Balochistan enduring extreme heat, cyclones, and erratic weather patterns. To tackle urban vulnerability and emissions, the government introduced the Pakistan Green Building Code, advanced an Urban Resilience Policy Framework, and promoted a low-carbon transport agenda through the CPEC-II Green Corridor. Additionally, the country's first-ever Carbon Market Policy aims to attract clean-tech investments and incentivize decarbonization. Economic Survey 2024-25: Pakistan misses growth target Provinces are also aligning with the federal push. Punjab launched its Climate Resilient Vision 2024 and anti-smog measures, Sindh finalized a Provincial Climate Action Plan, and KP continued its massive reforestation drive, adding 121.5 million trees under the 10 Billion Tree Tsunami. Balochistan, meanwhile, enforced an anti-plastic law and initiated a Climate Finance Cell. At COP29, Pakistan highlighted these initiatives at its national pavilion, reinforcing its climate ambition on the global stage. Yet, the Survey warns that international support and climate justice remain critical, as Pakistan's exposure to worsening climate shocks far outweighs its emissions footprint. With climate volatility escalating, Pakistan's progress hinges on turning financial pledges into results, scaling provincial efforts, and securing long-term global partnerships.
Business Recorder
30-05-2025
- Business
- Business Recorder
Fitch upgrades Pakistan's rating: macroeconomic stabilisation acknowledged
ISLAMABAD: Pakistan's economy has been upgraded by Fitch Ratings, acknowledging macroeconomic stabilisation in the outgoing fiscal year, supported by improved fiscal performance, current account surplus and easing inflation, says Monthly Economic Update released by Finance Division on Thursday. Revenue growth outpaced expenditure, reducing the fiscal deficit and further strengthening the primary surplus. The current account posted a $1.9 billion surplus, with a robust growth in exports and remittances. Inflation declined to a record low, paving the way for a more accommodative monetary policy stance. While Large Scale Manufacturing (LSM) activity remained sluggish, the automobile and export-oriented sectors showed encouraging performance. Fitch upgrades Pakistan rating to 'B-' Climate finance initiatives, including the Resilient and Sustainable Facility from the IMF and launching the Green Sukuk, reinforce the path toward inclusive and sustainable growth. POLICY INTERVENTIONS SUPPORTING AGRICULTURE GROWTH During the Rabi season 2024-25, wheat was cultivated on 22.07 million acres with an estimated output of 28.98 million tonnes. Farm input utilisation showed consistent improvement, supported by government efforts to ensure quality seeds, adequate credit, and availability of the machinery and fertilisers. Agricultural credit disbursement increased by 15.0 per cent to Rs1,880.4 billion during Jul-Mar FY2025, moving steadily toward the annual target of Rs2,572.3 billion. Imports of agricultural machinery surged by 10.0 per cent to $69.2 million in Jul-Apr FY2025, reflecting rising mechanization. For the Kharif season 2025, availability of Urea and DAP is estimated at 4,012 and 840,000 tonnes, respectively. Whereas their estimated offtake stands at 3,152 and 796,000 tonnes, which are 14.6 per cent and 24.0 per cent higher than last year, respectively. Large Scale Manufacturing (LSM) Sector Exhibits Uneven Recovery The LSM sector showed a mixed performance in March 2025. It registered year-on-year (YoY) growth of 1.8 per cent; however, this was offset by a month-on-month (MoM) contraction of 4.6 per cent. LSM declined by 1.5 per cent during Jul-Mar FY2025, compared to contraction of 0.2 per cent in the same period last year. Out of 22 sectors, 12 recorded positive growth, including Textile, Wearing Apparel, Coke & Petroleum Products, Beverages, and Pharmaceuticals. During Jul-Apr FY2025, the automobile sector posted robust growth, supported by increased production of cars (38.3 per cent), trucks and buses (95.8 per cent), and jeeps and pick-ups (80.0 per cent). Cement dispatches stood at 37.3 million tonnes during Jul-Apr FY2025, reflecting a slight decline of 0.3 per cent over the last year. Domestic sales dropped by 5.6 per cent to 29.9 million tonnes, while exports increased by 28.8 per cent to 7.4 million tonnes. INFLATION FALLS TO RECORD LOW LEVEL CPI inflation dropped to 0.3 per cent YoY in April 2025, down from 0.7 per cent in March and 17.3 per cent in April 2024. MoM, it declined by 0.8 per cent, following a 0.9 per cent increase in March and a -0.4 per cent decline in April 2024. Major contributing factors of YoY inflation include health (14.1 per cent), education (10.9 per cent), clothing and footwear (9.1 per cent), alcoholic beverages and tobacco (7.9 per cent), restaurants and hotels (6.3 per cent), and household equipment (4.0 per cent). Declines were recorded in perishable food items (-26.7 per cent), transport (-3.9 per cent), housing and utilities (-2.6 per cent), and non-perishable food items (-0.8 per cent). The Sensitive Price Indicator for the week ending May 22, 2025, decreased by 0.29 per cent, with 14 items showing a price decrease. FISCAL INDICATORS DEMONSTRATE ENHANCED MANAGEMENT DISCIPLINE During Jul-Mar FY2025, total revenue grew by 36.7 per cent to Rs13,367.0 billion, compared to Rs9,780.4 billion last year, led by a 68 per cent rise in non-tax revenues which reached Rs4,229.7 billion, mainly driven by SBP profits, petroleum levy, dividends, and surcharges. FBR tax collection also increased outflows of $290.0 million and $285.5 million, respectively. As of May 16, 2025, foreign exchange reserves stood at $16.6 billion, including $11.4 billion held by SBP. The MPC further Cuts the Policy Rate, Credit is Expanding, while PSX felt the geopolitical pressure The Monetary Policy Committee (MPC), on May 5, 2025, reduced the policy rate by 100 basis points to 11 per cent, observing a persistent decline in inflation. During July 1st—May 2nd, FY2025, broad money (M2) grew by 4.7 per cent, compared to 7.0 per cent in the same period last year. Net Foreign Assets increased to Rs1,210.5 billion (up from Rs590.0 billion), while Net Domestic Assets rose by Rs476.2 billion, significantly lower than the Rs1,588.3 billion recorded last year. Private sector credit expanded to Rs751.5 billion, higher than Rs239.9 billion in the corresponding period last year. In April 2025, the KSE-100 index remained under pressure amid geopolitical tensions with India, closing at 111,327 points after losing 6,480 points over the month which has been recovered in May 2025. Market capitalization declined by Rs853 billion and closed at Rs13,521 billion. In April 2025, the Bureau of Emigration and Overseas Employment registered 53,231 workers, a 9.0 per cent decrease from 58,555 in March. The Pakistan Poverty Alleviation Fund, in partnership with 24 organisations, disbursed 20,705 interest-free loans worth Rs960 million during the month. Since 2019, a total of 3.0 million loans amounting to Rs116.71 billion have been provided. During Jul-Mar FY2025, Rs409.4 billion was spent under the BISP, representing a 28.7 per cent increase compared to last year, against an allocation of Rs592.5 billion. To channel investments into environmentally-sustainable projects, the government has launched the first-ever Green Sukuk. This initiative indicates the country's efforts toward a green and resilient economy. Copyright Business Recorder, 2025
Business Recorder
30-05-2025
- Business
- Business Recorder
Fitch upgrades country's rating: Macroeconomic stabilisation acknowledged
ISLAMABAD: Pakistan's economy has been upgraded by Fitch Ratings, acknowledging macroeconomic stabilisation in the outgoing fiscal year, supported by improved fiscal performance, current account surplus and easing inflation, says Monthly Economic Update released by Finance Division on Thursday. Revenue growth outpaced expenditure, reducing the fiscal deficit and further strengthening the primary surplus. The current account posted a $1.9 billion surplus, with a robust growth in exports and remittances. Inflation declined to a record low, paving the way for a more accommodative monetary policy stance. While Large Scale Manufacturing (LSM) activity remained sluggish, the automobile and export-oriented sectors showed encouraging performance. Fitch upgrades Pakistan rating to 'B-' Climate finance initiatives, including the Resilient and Sustainable Facility from the IMF and launching the Green Sukuk, reinforce the path toward inclusive and sustainable growth. POLICY INTERVENTIONS SUPPORTING AGRICULTURE GROWTH During the Rabi season 2024-25, wheat was cultivated on 22.07 million acres with an estimated output of 28.98 million tonnes. Farm input utilisation showed consistent improvement, supported by government efforts to ensure quality seeds, adequate credit, and availability of the machinery and fertilisers. Agricultural credit disbursement increased by 15.0 per cent to Rs1,880.4 billion during Jul-Mar FY2025, moving steadily toward the annual target of Rs2,572.3 billion. Imports of agricultural machinery surged by 10.0 per cent to $69.2 million in Jul-Apr FY2025, reflecting rising mechanization. For the Kharif season 2025, availability of Urea and DAP is estimated at 4,012 and 840,000 tonnes, respectively. Whereas their estimated offtake stands at 3,152 and 796,000 tonnes, which are 14.6 per cent and 24.0 per cent higher than last year, respectively. Large Scale Manufacturing (LSM) Sector Exhibits Uneven Recovery The LSM sector showed a mixed performance in March 2025. It registered year-on-year (YoY) growth of 1.8 per cent; however, this was offset by a month-on-month (MoM) contraction of 4.6 per cent. LSM declined by 1.5 per cent during Jul-Mar FY2025, compared to contraction of 0.2 per cent in the same period last year. Out of 22 sectors, 12 recorded positive growth, including Textile, Wearing Apparel, Coke & Petroleum Products, Beverages, and Pharmaceuticals. During Jul-Apr FY2025, the automobile sector posted robust growth, supported by increased production of cars (38.3 per cent), trucks and buses (95.8 per cent), and jeeps and pick-ups (80.0 per cent). Cement dispatches stood at 37.3 million tonnes during Jul-Apr FY2025, reflecting a slight decline of 0.3 per cent over the last year. Domestic sales dropped by 5.6 per cent to 29.9 million tonnes, while exports increased by 28.8 per cent to 7.4 million tonnes. INFLATION FALLS TO RECORD LOW LEVEL CPI inflation dropped to 0.3 per cent YoY in April 2025, down from 0.7 per cent in March and 17.3 per cent in April 2024. MoM, it declined by 0.8 per cent, following a 0.9 per cent increase in March and a -0.4 per cent decline in April 2024. Major contributing factors of YoY inflation include health (14.1 per cent), education (10.9 per cent), clothing and footwear (9.1 per cent), alcoholic beverages and tobacco (7.9 per cent), restaurants and hotels (6.3 per cent), and household equipment (4.0 per cent). Declines were recorded in perishable food items (-26.7 per cent), transport (-3.9 per cent), housing and utilities (-2.6 per cent), and non-perishable food items (-0.8 per cent). The Sensitive Price Indicator for the week ending May 22, 2025, decreased by 0.29 per cent, with 14 items showing a price decrease. FISCAL INDICATORS DEMONSTRATE ENHANCED MANAGEMENT DISCIPLINE During Jul-Mar FY2025, total revenue grew by 36.7 per cent to Rs13,367.0 billion, compared to Rs9,780.4 billion last year, led by a 68 per cent rise in non-tax revenues which reached Rs4,229.7 billion, mainly driven by SBP profits, petroleum levy, dividends, and surcharges. FBR tax collection also increased outflows of $290.0 million and $285.5 million, respectively. As of May 16, 2025, foreign exchange reserves stood at $16.6 billion, including $11.4 billion held by SBP. The MPC further Cuts the Policy Rate, Credit is Expanding, while PSX felt the geopolitical pressure The Monetary Policy Committee (MPC), on May 5, 2025, reduced the policy rate by 100 basis points to 11 per cent, observing a persistent decline in inflation. During July 1st—May 2nd, FY2025, broad money (M2) grew by 4.7 per cent, compared to 7.0 per cent in the same period last year. Net Foreign Assets increased to Rs1,210.5 billion (up from Rs590.0 billion), while Net Domestic Assets rose by Rs476.2 billion, significantly lower than the Rs1,588.3 billion recorded last year. Private sector credit expanded to Rs751.5 billion, higher than Rs239.9 billion in the corresponding period last year. In April 2025, the KSE-100 index remained under pressure amid geopolitical tensions with India, closing at 111,327 points after losing 6,480 points over the month which has been recovered in May 2025. Market capitalization declined by Rs853 billion and closed at Rs13,521 billion. In April 2025, the Bureau of Emigration and Overseas Employment registered 53,231 workers, a 9.0 per cent decrease from 58,555 in March. The Pakistan Poverty Alleviation Fund, in partnership with 24 organisations, disbursed 20,705 interest-free loans worth Rs960 million during the month. Since 2019, a total of 3.0 million loans amounting to Rs116.71 billion have been provided. During Jul-Mar FY2025, Rs409.4 billion was spent under the BISP, representing a 28.7 per cent increase compared to last year, against an allocation of Rs592.5 billion. To channel investments into environmentally-sustainable projects, the government has launched the first-ever Green Sukuk. This initiative indicates the country's efforts toward a green and resilient economy. Copyright Business Recorder, 2025
