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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 closely as the relationship between the IMF and Pakistan’s economic managers. Simply replace the “star cross’d” lovers with Pakistan’s soft-spoken, hard-hitting finance minister and the IMF’s head honcho on the stand-by arrangement, and Sheikh appears to be wooing the Fund with a similar reasoning. After all, an indirect tax collected at every stage based on the differential between input and output values will generate the same amount of revenues for the government, regardless of whether it is called value-added tax, ...

Can pay, won’t pay! 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 of revenue generated through these taxes has so far been paltry. Official data show that in FY06, ...
ADB’s fiscal roundup 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 revenues is largely to be blamed for the deterioration of the fiscal position, with the ...
No change in discount rate 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 the government will implement some austerity measures. Today, (as of March 12 ...
Tax stalemate 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 paying taxes appear well-founded based on the government’s inability to break ...
Tax and the trust deficit 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 expression, freedom of association, and a free media, taking ...
Longing for long term bills 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. Aided by a decline in price risk, the 6-month and 12-month papers have surprised the market by drawing investors away ...


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Foreign Debt $62.649bn
Per Cap Income $1,512
GDP Growth 4.24%
Average CPI 8.6%
Trade Balance $-2.197 bln
Exports $1.729 bln
Imports $3.926 bln
WeeklyNovember 30, 2015
Reserves $19.828 bln