Pakistan Economy & Budget; NIA Pathankot Report; Hillary v Trump

[Riaz Haq]

How’s Pakistani economy doing? Is it gaining strength? How are the major economic indicators looking? What are Nawaz Sharif government’s economic priorities? How has it allocated spending in budget 2016-17 presented to National Assembly by Finance Minister Ishaq Dar? Why does Pakistan rely almost entirely on indirect taxation to raise revenue? Why is there such disproportionate burden for revenue placed on the poor and the middle-income Pakistanis? Why is the taxation system in Pakistan so regressive? What needs to be done to broaden the tax net to increase revenue and make the taxation system more fair. What should the provincial governments do? Should they impose at least a modest agriculture income tax and various service taxes to raise revenue?

How did the Indian National Investigation Agency conclude that Pakistan and its agencies had no role in Pathankot incident in India? Why are they now backtracking from this conclusion? What evidence of India-Pakistan border breach do they have to implicate Pakistani nationals in the incident? Or is it just Indian media hype, part of the Indian government propaganda by some elements to unfairly malign Pakistan?

What are Donald Trump’s and Hillary Clinton's strategies for the general elections in November 2016? Can Trump win by attacking minorities and women? Why the did Trump so personally and viciously attack US Federal Judge Gonzalo Curiel and New Mexico Governor Susana Martinez? Will Hillary’s strategy of questioning Trump’s temperament to be US president work? Will she use fear of mercurial Trump’s potential actions as president with his finger on the nuclear button to scare off voters from the Republican candidate?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Ali H. Cemendtaur and Riaz Haq (www.riazhaq.com)


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[Riaz Haq]

#Pakistan meets #tax revenue target of Rs 3 trillion (US$30 billion) for first time in 10 years - The Economic Times

http://economictimes.indiatimes.com/news/international/business/pak...

Pakistan collected 3,104 billion rupees ($29.7 billion) in taxes in fiscal year 2015/16, the finance ministry said on Friday, the first time it has met its tax revenue target in a decade. 

Last year, the government collected 2,588 billion rupees in taxes but missed its target by 9 percent. 

Tax collection has been one of the biggest challenges facing successive governments who have promised to rein in tax evaders but faced fierce resistance to change, including from the .. 

Read more at:
http://economictimes.indiatimes.com/articleshow/53006237.cms?utm_so...

[Riaz Haq]

#Pakistan's Liquid Foreign Reserves position: US$21.7 Billion
http://www.brecorder.com/pakistan/banking-a-finance/307287-pakistan...


The total liquid foreign reserves held by the country stood at US$21,765.8 million on June 24, 2016, said weekly forex reserves report issued by the State Bank of Pakistan (SBP) here on Thursday.

The break-up of the foreign reserves position is as under:-

Foreign reserves held by the SBP:US$ 16,819.6 million, Net foreign reserves held by commercial banks:US$ 4,946.2 million, Total liquid foreign reserves: US$ 21,765.8 million.

During the week ending June 24, 2016, SBP's Liquid FX Reserves increased by US$ 4 million to US$16,820 million, compared to US$16,816 million in the previous week.

[Riaz Haq]

#Pakistan's high import tariff prevents #wheat imports. Government's high procurement price prevents exports http://bit.ly/29DOh3Q 

Pakistan procured 6 million tonnes of wheat from the recently concluded wheat harvest, significantly lower than the 7.05 million tonnes target that was announced prior to the onset of harvest, but approximately 1 million tonnes higher than a year ago. The U.S. Department of Agriculture’s (USDA) Foreign Agricultural Service (FAS) said in a July 1 report. Total procurement is just 24% of the estimated total crop. At this point, Pakistan is effectively cut off from the international wheat market as high procurement prices make exports uncompetitive and a high tariff prevents imports.

Over the past four years, public sector wheat procurement has ranged between 5 million tonnes to 6 million tonnes annually. With around 4 million tonnes in carryover stocks this year’s procurement will boost public stock levels to around 10 million tonnes shortly after the start of the marketing year, similar to the levels reached during the past two years.

The estimate of 2016 wheat production is unchanged at 25.3 million tonnes. About 25% of Pakistani wheat growers produce a marketable surplus that amounts to an estimated 50% of the crop or 12 million tonnes to 13 million tonnes. The government and private sector typically split the surplus with each purchasing about half of the marketed crop, although, as mentioned above, government procurement was just 24% of the crop this year. The balance of the crop remains on farm for local consumption. The government’s role in the procurement of the harvest is generally sufficient to influence market prices, creating an effective price floor in the domestic wheat market.

Pakistan, through the provincial food departments and the federal Pakistan Agricultural Storage and Services Corporation (PASSCO), procures wheat from farmers at the support price and then releases wheat for sale to flour mills at the government’s fixed issue price. The system aims to protect farmers from price fluctuations and ensure a minimum return to farmers and encourages wheat production. The Pakistani government maintained the wheat support price for the market year 2016-17 crop, at 1,300 rupees per 40 kilograms ($310 per tonne). The government spent approximately $1.8 billion for wheat procurement this year, much of it financed through loans that will be paid back when the wheat is sold to the private sector. Some wheat stocks are used to feed communities that have been displaced from their homes due to conflict and some is sold as flour at reduced rates to consumers via low-priced, government-run utility stores.

As global wheat prices have declined, Pakistan’s high sales price for publicly-held stocks has resulted in limited export buyer interest. In January 2015, the Economic Coordination Committee (ECC) of the Cabinet approved a subsidy of $55 per tonne for Punjab and $45 per tonne for Sindh for Islamabad three months to cover exports of up to 1.2 million tonnes of wheat. The deadline was extended twice until Sept 30, 2015. ...

Afghanistan has been the main wheat export market for Pakistan for many years mainly due to easy accessibility and traditional trade linkages between the two countries. Given the present trend, Pakistan’s market year 2016-17 wheat flour exports to Afghanistan are forecast to be 700,000 tonnes (wheat equivalent).

The domestic wheat market has been insulated from imports by a 40% regulatory duty. With a high tariff and high domestic prices, Pakistan continues to be isolated from the international wheat market. The tariff is well below Pakistan’s bound tariff rate (the maximum tariff rate Pakistan can establish) for wheat of 150%. Consequently, Pakistan is not likely to import any significant quantity of wheat during market year 2016-17.

[Riaz Haq]

Increase in Pakistan’s energy consumption depicts higher economic activities

Pakistan's primary energy consumption increased by 5.9 percent to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2MTOE in 2014 depicting higher economic activities.

According to the statistical data of British Petroleum on energy use around the world, the primary energy consumption in China grew by 1.12 percent from 2014 to 2015 that has resulted in slowdown in China’s economy. India’s primary energy consumption increased by 5.1 percent during the same period which is lower than that of Pakistan. Indian GDP growth, though highest in the world remains much below the peaks it attained at the start of this decade.

The fuels consumed for producing primary energy show that in 2014, Pakistan consumed 22.8MTOE of oil that increased to 25.2MTOE in 2015. Its natural gas use also increased from 37.7MTOE in 2014 to 39.0MTOE in 2015. The consumption of coal remained the same at 4.7MTOE in both years.

According to the report, electricity consumption in Pakistan increased from 96.2 terawatt-h in 2008 110.0 terawatt-h in 2015. The increase was restricted to 99.3 terawatt-h till 2012; showing cumulative increase of 4 percent only, but in the next three years the consumption cumulatively increased by 10.7 percent of which 2.7 percent increase was in 2015 over 2014. Indian electricity consumption in comparison increased more robustly being 833.4 terawatt-h in 2008 that increased to 1,304.8 terawatt-h in 2015.

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India produces 45.5MTOE from natural gas, 407.2MTOE from coal that is 100 times more than the primary energy that Pakistan derives from coal. Its hydro electric generation is 8.6MTOE. It derives 15.5MTOE from renewable that is 30 times more than what Pakistan obtains from renewable. The primary energy obtained by China from natural gas is 177.6MTOE, from coal it is a whopping 19,203MTOE. Its hydro electric energy amounts to 254.9MTOE, nuclear 38.6MTOE and renewable 62.7MTOE. The renewable energy extracted by China is equivalent to 60 percent of the total energy produced in Pakistan.

Bangladesh in 2008 consumed only 34.2 terawatt-h electricity that was almost 1/3rd of the power consumption in Pakistan. In 2015 the gap was reduced to 60 percent of the power consumed in Pakistan. Bangladesh is exporting much more than Pakistan despite low power use because it adds high value to its apparel. The power requirement of the garment industry is nominal when compared with spinning, weaving and processing that produce low value-added textiles exported by Pakistan. The electricity consumption in China increased to 5,810 terawatt-h in 2015 compared with 3495 terawatt-h in 2008.

Coal, wind and solar energy are the cheapest source of energy around the world. Wind and solar along with hydro electricity are the cleanest energy fuels. China fulfilled 1,920MTOE of its energy needs from coal, India 388.7MTOE, and Pakistan only 4.7MTOE. Coal use for energy production is confined only to the private sector in Pakistan. Around 3,000MW coal based power plants are expected to be commissioned by 2019 after which share of coal in the energy mix would substantially increase. Wind power consumption in China was 41MTOE in 2015, it was 9.4MTOE in India and only 0.1MTOE in Pakistan. Solar power production in 2015 was 8.9MTOE in China, 1.5MTOE in India and only 0.3MTOE in Pakistan. Pakistan is also on the course to double its hydro electric production to over 16,000MW by the end of 2021.

https://www.thenews.com.pk/print/131885-Increase-in-Pakistans-energ...

http://www.bp.com/content/dam/bp/pdf/energy-economics/statistical-r...