People wearing face masks buy clothes alongside a street in Islamabad on Friday. AFP
Pakistan presented a Rs7.13 trillion tax-free deficit federal budget in the National Assembly on Friday with its major portions allocated for debt servicing and defence.
The Pakistani business community in the UAE and financial analysts shared their mixed reactions with Gulf Today.
Engineer Amir Muqam, former federal minister and President of Pakistan Muslim League-Nawaz (PML-N), Khyber Pakhtunkhwa (KP) strongly criticised the federal government’s 2020-21 budget. He mentioned that the small and backward areas have been totally ignored in the budget. No relief and breathing space have been given in budget for the poor masses and the youth. He noted that the budget has created havoc among the poor people. The PML-N leader echoed that the government is totally failed to provide relief to the poor masses. He mentioned that the government is hiding its weak policies and future developmental plans behind coronavirus outbreak, which is totally unacceptable. This budget is a (Pandora box), which will give birth to more financial and social issues.
Muqam noted that the country, whose economic growth was marching ahead with a 5.8 per cent fiscal growth rate two years back, unfortunately today for the first time in 68 years, the country’s GDP has plunged to negative.
“The budget and its goals are unrealistic, and problems and public difficulties are likely to increase, Muqam concluded.
Muhammad Iqbal Dawood, President Pakistan Business Council Dubai said: This budget is business-friendly as in this tough time and pandemic it is supposed to be better.
No new taxes imposed except some cigar/tobacco items. Energy Drinks, Vigo type pickups which is less utility and more impression.
There are not any favour or support to the demands of business people’s and not any facilities to resident abroad.
But in this tough time more expectations are also not genuine.
Further comments possible upon receipt of finance bill.
But in general and in view of present situation. This is supported to be business-friendly budget.
Ahmed Shaikhani, Senior Vice President, Pakistan Business Council Dubai and Managing Director, Shaikhani Group said: The government has completely sidelined the overseas Pakistanis in the 2020-21 budget. The overseas Pakistanis have a great contribution in the country’s GDP growth by sending remittances. The overseas Pakistanis sent $4.6 billion of remittances to Pakistan in first quarter of 2020, and we are expecting the same target in the second quarter of this year. The government has not taken any major developmental initiatives since last June due whom the country’s economic growth has weakened and we are expecting huge inflation in the coming months.
Kashif Ansari, CEO, IQI Global said: As expected the budget is to provide relief to the people, there is no new tax in the 2020-21 budget, furthermore, a special fund will be utilized in the form of direct fiscal injections it will benefit those who have lost their jobs and income during the COVID-19 pandemic”.
Emphasis will be given to supporting industries affected by the pandemic boosting domestic consumption, financing schemes, as well as supporting workers and small and medium-sized enterprises.
The sales tax rate for big retailers has been decreased from 14 to 12 %. Tax exemption is being given to overseas Pakistanis over the investment in saving bills; the construction sector will be supported by Naya Pakistan Housing Scheme which aims to build 10 million houses for the poor in Pakistan.
Meanwhile, to mitigate the damage done to various sectors by the coronavirus pandemic, the government provided Rs75bn for the health sector, Rs150b was allocated for poor families and construction of Panah Gahs as well as Rs200bn for daily wage workers hit by the pandemic.
The minister noted that the government had provided relief worth Rs100b in the form of electricity and gas bills whereas Short and Medium Enterprises were provided relief amounting to Rs50bn. Azhar said that the prices of petrol and diesel by Rs32 per litre and Rs45 per litre. He said that the government had done away with the Fixed Tax Regime and provided WHT relief for the construction sector, all the while making the sector into an industry.
The minister said that the government had put the inflation target at 6.5% and said that the Foreign Direct Investment will be increased by 25%. He said that Rs1,324bn had been set aside for the development budget while the PSDP had been provided Rs650b.
The tranches were fully subscribed by a syndicate of leading UAE banks, the government statement said.
The UAE’s US$3 billion deposit with the State Bank of Pakistan has contributed to alleviating the country’s financial crisis and easing pressure on foreign exchange reserves,
Community members residing in different emirates are praising highly the humane acts of this kind-hearted expatriate, who has helped scores of his compatriots in various ways, including arranging air tickets on special repatriation flights.
Spot gold jumped 1.6% to $1,942.45 per ounce by 0816 GMT, rebounding from a 2.5% drop in early Asian trade. US gold futures rose 0.2% to $1,949.40.
The dollar, which has held above a two-year low hit on Thursday of 92.495, was down nearly 0.1% against a basket of currencies at 93.643, after shedding gains made in Asian trading.
Brent crude was up 52 cents, or 1.2%, at $45.02 a barrel by 0648 GMT, after falling around 1% on Tuesday. West Texas Intermediate oil was up 49 cents, or 1.2%, at $42.10 a barrel, having dropped 0.8% in the previous session.
Britain officially entered recession in the second quarter after gross domestic product (GDP) contracted by 2.2 per cent in the first three months of the year. The technical definition of a recession is two quarterly contractions in a row.