Archives of Fiscal Policy

1. What’s in a name?

   2011-05-24 09:06:25 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   “Tis but thy name, that is my enemy,” said Juliet Capulet, upon learning that the love of her life came from mortal enemies of her own clan. Continuing to address the object of her desire, “What’s in a name? That which we call a rose, by any other name would smell as sweet.” It is not often that a situation in contemporary times resembles this famous scene from the 16th century play as...

2. Can pay, won’t pay!

   2011-04-14 05:34:38 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   By virtue of agriculture being a provincial subject, each province has in place a presumptive regime for the collection of income taxes from this sector. Going by the dictionary of Provincial laws, agricultural income consists of rents received from property used for agricultural purposes and income derived from cultivation or from owner-occupied buildings on the property. However, the quantum o...

3. Tax stalemate

   2011-04-12 05:51:18 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   Formulators of the national budget appear caught between a rock and a hard place as they scramble to produce a budget that not only curbs the widening gulf between government revenues and expenditures; but also face the unenviable task of improving documentation of the economy, and consequently, the tax net. Fears that the government will resort to increasing the burden of taxes on those already...

4. ADB’s fiscal roundup

   2011-04-08 05:08:13 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   The Asian Development Bank has reinforced what many economists in the country already feared: an impending economic fiasco, with fiscal problems leading the way. The report, titled “Asian Development Outlook 2011”, recalled the fiscal faux pas committed by the country’s government, with the fiscal deficit widening from 5.3 percent of GDP in FY09 to 6.3 percent in FY10. The decline in tax...

5. Tax and the trust deficit

   2011-04-01 07:15:54 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   If there is one thing the present government is consistent in, it’s inconsistency. For the nth time, in its three years of rule, the government has taken back one of its earlier decisions – this time choosing to give the sales tax amnesty to the export-oriented sectors. While moves likes these show that democracy is working with people having a say in policy-formation due to freedom of ...

6. No change in discount rate

   2011-03-25 08:33:00 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   The macro headlines have been turning positive: inflation is down and is expected to remain below 14 percent for the next two months; the external account is doing unexpectedly well; and more importantly, the government is keeping its promises made to the SBP. Two months back, Kardar was optimistic that the Ministry of Finance will abstain from inflationary borrowing from the central bank while ...

7. Longing for long term bills

   2011-03-25 08:27:13 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   The Treasury Bill auctions in the third quarter of the current fiscal year concluded with some positive trends, suggesting the strengthening of macroeconomic indictors. With fundamental factors pointing to a stable interest rate in the upcoming monetary policy, there has been an apparent shift in the market participation pattern during the treasury bill auctions held in 3QFY11. Aid...

8. Hafeez takes Pakistan on IMF track

   2011-03-17 08:24:34 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   Following the parliament’s failure to take the much-needed steps, the President has ordered measures to be taken to curtail the mounting fiscal deficit within 5.3 percent of GDP. This can be analogous to the bridge finance facility for fiscal support, availed from the IMF in lieu of the delay in FoDP disbursements. However, its fate beyond a quarter depends upon parliament’s support in the c...

9. Farming tax

   2011-03-09 05:29:52 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

   It’s nice to see somebody from the government finally speaking up on the failure in taxing farm income so far. Media reports suggest that the federal government, led by finance minister Hafeez Shaikh, has been urging the provinces to tax agricultural income, real estate, and wealth, in order to ensure their respective fiscal balance. The move comes months after the RGST has met a sta...

10. The finmin’s daydreams

    2011-03-08 06:13:12 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

    The ministry of finance seems to be playing a merry go-round with the IMF, as another round of negotiation resulted in zero concrete conclusions. Till a few weeks back, there were voices within the MoF that fiscal deficit would be as high as 8-8.5 percent. But that could have well been a tactical move by the politically motivated finance minister to pressurise high ups in the party as well as le...

11. Restructuring the savings industry

    2011-03-04 09:53:36 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

    Following lacklustre performance in the first half, the National Savings Schemes pulled up its socks in January. The state-run savings institution raised Rs37 billion (on net basis) in January, compared to an average of Rs14 billion per month in the preceding six months. At a time when the government’s increasing fiscal deficit is forcing it to rely on domestic banking sources, handsome mo...

12. PaCCS plays ‘hard to get’

    2011-03-04 09:52:08 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

    For a country that is suffering from the ‘acute fiscal deficiency syndrome’, playing dilly-dally with a sector that has contributed over 12 percent to total tax revenues for the first seven months of FY11 doesn’t make a lot of sense. This woebegone sector – Customs – has battled with the issue of an automated clearing system, Pakistan Automated Customs Clearing System (PACCS) to be pre...

13. IMF’s comfort for fiscal cushion

    2011-03-04 09:32:50 GMT : (BR Research - Pakistan Macroeconomics/Fiscal Policy)

    A one-off high receipt from the Coalition Support Fund ($760 mn), earlier transfers of SBP profits, and possibly some accounting gimmicks to show subsidies of power and other sectors in contingent liabilities, made it possible for fiscal managers to post a budget deficit at 1.3 percent of GDP for the second quarter. Traditionally, fiscal deficit for the first half of a fiscal year turns out to b...