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Express Tribune
15-06-2025
- Business
- Express Tribune
K-P's debt surges over Rs43b in one year
Khyber-Pakhtunkhwa's total debt burden has increased by Rs43.59 billion over the past year, official data reveals. At the beginning of the current fiscal year, the province's total debt stood at Rs679.54 billion. However, by July 1, 2025, it is projected to rise to Rs723.13 billion. As of July 1, 2024, the province had no domestic debt, and it remains free from internal borrowing to this day. The entire debt consists of external loans. At the start of the current fiscal year, the external debt was Rs679.54 billion, which is now expected to reach Rs723.13 billion by the beginning of the next fiscal year. Despite the rising debt, the provincial government has repaid Rs30.70 billion in loans during the ongoing fiscal year. Originally, the government had planned to repay Rs67 billion — Rs40 billion in principal and Rs27 billion in interest. However, revised estimates indicate that only Rs55 billion was paid, comprising Rs35 billion in principal and Rs20 billion in interest. For the upcoming fiscal year, the government has planned debt repayments totaling Rs65 billion — Rs40 billion in principal and Rs25 billion in interest. The largest portion of the province's debt is owed to the Asian Development Bank (ADB), totaling Rs323.63 billion, followed by Rs307 billion owed to the International Development Association (IDA). The remaining debt is owed to other international financial institutions. It may be recalled that in 2021, the province's debt stood at Rs295.96 billion. It rose to Rs359.33 billion in 2022, jumped to Rs530.72 billion in 2023, and has now reached Rs723.13 billion — a more than doubling of the debt burden in just four years.
Yahoo
04-06-2025
- Business
- Yahoo
World Bank approves funding for Inga 3 development programme
The World Bank has approved a US$250 million credit from the International Development Association that will help the Democratic Republic of Congo lay the foundations for the sustainable development of Inga 3.
Business Recorder
26-05-2025
- Business
- Business Recorder
Taxation system needs fundamental reform
EDITORIAL: Reportedly, the World Bank (WB) deferred the approval of additional International Development Association (IDA) credit equivalent to $70 million for the Pakistan Raises Revenue (PRR) project. It is concerning that official documents reveal Pakistan's tax system raises little revenue, creates economic distortions, and imposes a disproportionate burden on the poor — largely due to systemic inefficiencies. Alarmingly, the World Bank's analysis shows that Pakistan's fiscal policies have a more pronounced effect on increasing poverty and a weaker impact on reducing inequality compared to other lower-middle-income countries. The WB analysis reflects ground realities. Pakistan's taxation system is heavily skewed towards indirect taxes, while even a significant portion of direct taxes is collected through indirect mechanisms. The result is: even the direct taxes levied in this manner get priced in similar to indirect prices that are passed on and exacerbate the burden of high rates of indirect taxes on the people with disproportionately higher onus on the poor, while the wealthy remain immensely undertaxed. A major share of taxes is collected at the import stage — on average, around 60 percent of GST during FY19–FY24. Additionally, a sizable portion of direct taxes is collected at the import stage. Compliant businesses adjust this against their income tax liabilities, but informal players simply pass the cost on to consumers. Even within the domestic supply chain, taxes intended to target traders and retailers are eventually transferred to the end consumer. These tax inefficiencies are embedded in domestic goods, making them more expensive and reducing the competitiveness of local firms. This is a key reason why Pakistan's exports have failed to diversify beyond traditional sectors. Large exporters with access to FBR (Federal Board of Revenue) officials and the PMO (Prime Minister's Office) get their tax refunds, while smaller or newer players struggle to achieve the same. You cannot export inefficiencies — this is why exports have stagnated, while distortions remain priced into domestic goods and services. The lower the income, the higher the burden — especially when essentials like milk are taxed at one of the highest GST rates in the world. The government has also imposed Super Tax on corporates, which in some cases — particularly in relation to FMCGs — has been passed on to consumers. This is evident from the fact that net margins for these companies have remained stable, while gross margins have increased. Higher income taxes are, in effect, also being passed on through price hikes. Higher taxation partly explains the unprecedented inflation witnessed over the past couple of years. This has pushed poverty levels up — now estimated at a staggering 44 percent. The poor are being strangled while the middle class is sliding into poverty. Meanwhile, the wealthy continue to enjoy rising incomes and pay a far smaller share of taxes leading to widening of the already yawning inequality. Another structural issue is tariff protection, which allows big businesses to protect their margins while raising prices for consumers — placing a heavier burden on low-income segments. Under the current tax structure, achieving productive growth and export expansion is nearly impossible. The system needs fundamental reform. All income — regardless of source — should be treated equally in both letter and spirit. Reliance on indirect taxes must be reduced. Corporate income tax rates should be lowered, and, most importantly, GST rate should be slashed. However, these goals remain pipe dreams without political will and enforcement. There must be a starting point. The government should capitalise on falling inflation, subdued global commodity prices, and improving economic sentiment to initiate long-overdue tax reforms in the FY26 budget. Copyright Business Recorder, 2025
Business Recorder
22-05-2025
- Business
- Business Recorder
Q3 FY25: Punjab's total debt portfolio surges 12pc
LAHORE: The Punjab government's total debt portfolio surged by Rs 20 billion, an increase of 1.2 percent, during the third quarter of the current fiscal year (FY) owing to a forex loss of Rs 17.5 billion and an increase in net debt position amounting to Rs 2.5 billion. As per a report released by the Punjab Finance Ministry for the period between January 1, 2025, and March 30, 2025, at the end of the third quarter, debt stock stood at Rs 1,674.0 billion, out of which Rs 1,672.7 billion is from external lenders and Rs 1.3 billion is from domestic sources. These loans collectively are 2.5 percent of Punjab's Gross State Domestic Product (GSDP). The report observed that Punjab's total debt stock surged from Rs 1,654 billion to Rs 1,674 billion in three months. However, the domestic loans showed a decline from Rs 1.5 billion (reported in December 2024) to Rs 1.3 billion. In contrast, external loans witnessed a gain from Rs 1,652.5 billion (reported in December 2024) to Rs 1,672.7 billion. The report noted that the outstanding debt stock at the end of March 2025 excludes provincial guarantees (awarded to various Punjab government entities) and commodity debt. The outstanding commodity debt stood at Rs 16 billion at the end of March 2025 which is mostly secured by wheat stock procured by the government for commodity operation along with a Federal government guarantee in the form of a Cash Credit Limit (CCL). The debt portfolio predominantly comprises borrowing from external sources with 99.9 percent coming from multilateral agencies and bilateral loans contracted mostly on concessional terms (low cost and longer tenor), procured mainly for infrastructure development and reform support whereas only 0.1 percent of the debt portfolio is domestically borrowed from the federal government, the report stated. Moreover, the report highlighted that the government's external debt is derived mainly from three key sources, with around 55 percent coming from the International Development Association (IDA) and International Bank for Reconstruction and Development (IBRD), 21 percent from the Asian Development Bank, 20 percent from China and 4 percent from other sources. As per the report, the agriculture, irrigation and livestock sector remained the major recipient of government borrowing, as its share constitutes 25 percent of the total outstanding followed by transport and communication 20 percent, education 20 percent, urban and community development at 16 percent, governance 10 percent, health 5 percent and others 4 percent. Moreover, it pointed out that the government's debt portfolio is dominated by foreign currency borrowings, with total exposure residing at 99.9 percent of the debt portfolio. Currency-wise exposure is denominated in USD (69 percent), followed by Special Drawing Rights (23 percent), Japanese Yen (5 percent) and Chinese Yuan (2 percent). Hence, the report noted, the government's debt by its composition remains exposed to foreign exchange risk; owing to this, any change in parity of the dollar and other foreign currencies with the rupee has a pronounced impact on the valuation of Punjab's debt portfolio when translated into rupee terms. The report also noted that overall, a significant portion (73 percent) of the debt portfolio comprises loans contracted at fixed interest rates and is not exposed to changes in international interest rates. However, the floating rate portion (27 percent) remains subject to periodic revision of interest rates since these loans attract floating reference rates (ie, SOFR, TONA, EURIBOR, etc). On debt servicing, it noted that by the end of FY 2024-25, the government is expected to pay Rs 161 billion to service its foreign debts which includes principal and interest due on outstanding debt; out of the projected debt servicing, Rs 120.8 billion was paid during the three quarters of the current fiscal year. Copyright Business Recorder, 2025
Yahoo
16-05-2025
- Business
- Yahoo
World Bank says Syria eligible for new loans after debts cleared
The World Bank says it will restart operations in Syria following a 14-year pause after the country cleared more than $15m of debt with financial backing from Saudi Arabia and Qatar. The United States-based institution announced on Friday that Syria no longer has outstanding obligations to the International Development Association (IDA), its fund dedicated to low-income countries. Earlier this week, Saudi Arabia and Qatar paid off Syria's outstanding debts of approximately $15.5m, paving the way for renewed engagement with international financial bodies. 'We are pleased that the clearance of Syria's arrears will allow the World Bank Group to reengage with the country and address the development needs of the Syrian people,' the bank said. 'After years of conflict, Syria is on a path to recovery and development.' The bank is now preparing its first project in Syria, which will focus on improving electricity access — a key pillar for revitalising essential services like healthcare, education, and water supply. Officials said it marks the beginning of expanded support aimed at stabilising Syria and boosting long-term growth. The bank's announcement coincides with a dramatic shift in US policy towards Damascus. US President Donald Trump announced on Tuesday that Washington would begin lifting sanctions imposed on Syria, including measures under the Caesar Syria Civilian Protection Act. On Wednesday, Trump met Syria's President Ahmed al-Sharaa on the sidelines of the GCC summit in Riyadh, marking a historic breakthrough in relations between the countries and the first such meeting between the two nations' leaders in 25 years. Secretary of State Marco Rubio confirmed that waivers would be issued, easing restrictions on entities previously penalised for dealings with the now former administration of Bashar al-Assad, which was toppled in December. 'Lifting sanctions on Syria represents a fundamental turning point,' Ibrahim Nafi Qushji, an economist and banking expert, told Al Jazeera. 'The Syrian economy will transition from interacting with developing economies to integrating with more developed ones, potentially significantly reshaping trade and investment relations.' The moves represent a significant moment in Syria's reintegration into the global financial system after 13 years of civil war and isolation. In April, a rare meeting was held in Washington involving officials from Syria, the IMF, the World Bank, and Saudi Arabia. A joint statement issued afterwards acknowledged the dire state of Syria's economy and promised coordinated efforts to support its recovery. The International Monetary Fund has since named its first mission chief to Syria in more than a decade. Ron van Rooden, previously involved with IMF operations in Ukraine, will lead the Fund's renewed Muehleisen, a former IMF strategy chief, noted the urgency of providing technical assistance to rebuild Syria's financial institutions. 'Those efforts could be funded by donors and grants in-kind,' he told the news agency Reuters, adding that some support could begin within months. Al-Assad was toppled after a lightning offensive by opposition fighters led by the Hay'et Tahrir al-Sham armed group last December. Syria's new government has sought to rebuild the country's diplomatic ties, including with international financial institutions. It also counts on wealthy Gulf Arab states to play a pivotal role in financing the reconstruction of Syria's war-ravaged infrastructure and reviving its economy. The government, led by interim President al-Sharaa, also wants to transition away from the system that gave al-Assad loyalists privileged access to government contracts and kept key industries in the hands of the al-Assad family.
