Pakistan set to unveil IMF-backed budget today, aimed at balancing growth and stability
The budget comes a day after the release of the Economic Survey of Pakistan, which showed that the country missed its annual growth target, expanding by 2.7 percent against a goal of 3.7 percent.
Economists say the government is now walking a 'tightrope' as it prepares its fiscal roadmap for the coming year.
'The upcoming budget is expected to be fiscally disciplined, aiming to strike a delicate balance between economic stability and inclusive growth,' said Sana Tawfik, head of research at Karachi-based brokerage Arif Habib Limited.
Pakistan's agriculture sector was a major drag on overall performance in the outgoing fiscal year, growing just 0.56 percent, while the industrial sector, especially large-scale manufacturing, also lagged.
The services sector fared slightly better with an estimated 2.9 percent growth. For the upcoming year, the government is targeting 4.2 percent GDP growth, according to Planning Minister Ahsan Iqbal.
In the new budget, businesses across sectors, including textiles, real estate, capital markets alongside foreign investors, are hoping for rationalization of key taxes such as the sales tax, capital gains tax, super tax and the levy on salaried income.
The government, however, is expected to stay the course on reforms mandated by the International Monetary Fund (IMF), which have helped stabilize the economy after years of high debt and dollar shortages.
'With IMF engagement in focus, the government is likely to prioritize fiscal consolidation, emphasizing revenue enhancement through broadening the tax base,' Tawfik said.
The IMF has pressed Pakistan to bring more sectors into the tax net, particularly agriculture, real estate and retail.
Prime Minister Shahbaz Sharif's administration has already withdrawn subsidies and raised electricity tariffs in recent years to boost revenue, key conditions under the IMF program.
'While development spending may remain contained due to limited fiscal space, the overall direction appears to favor continuity of reform,' Tawfik said.
Mushtaq Khan, former chief economist at Bank Alfalah Limited, said the government is expected to wage a 'war on cash' in the coming fiscal year by promoting a cashless economy.
He added the Sharif administration now appears more 'confident' as his coalition government has seemingly gained political strength in the wake of the recent military standoff with India.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Al Arabiya
21 minutes ago
- Al Arabiya
Canada's Couche-tard drops offer to buy japanese 7-eleven convenience stores
Canadian retail chain Alimentation Couche-Tard is dropping its proposal to acquire Seven & i Holdings Co., the Japanese operator of the 7-Eleven convenience store chain, citing frustration in ongoing negotiations that showed a lack of constructive engagement. The 7-Eleven parent company rejected an offer last year, but Couche-Tard, which runs the global Circle K chain, was still interested and tried to coax a deal with the Japanese chain known here as conbini. In a letter dated July 16 and sent to the Seven & i board, Couche-Tard stressed it had made a good offer earlier this year in a proposal of 2,600 yen ($17.50) per ordinary share in cash, which it said represented a 47.6 percent premium to the stock price. The initial offer made last year was for 2,200 yen ($14.86) per share in cash. In the letter sent to media Thursday and signed by its two top executives, including founder Alain Bouchard, Couche-Tard expressed exasperation at the response it was getting from Seven & i despite repeated attempts at dialogue. 'We have been very patient and respectful throughout this process, beginning with our meeting on July 23, 2024,' the letter said. 'You have engaged in a calculated campaign of obfuscation and delay to the great detriment of 7 & i and its shareholders. We believe this approach reinforces our concerns about your approach to governance. Based on this persistent lack of good faith engagement, we are withdrawing our proposal.' Couche-Tard, which runs nearly 17,000 stores in more than 30 countries and territories, including the US, said the documents it got lacked key information, executives were no-shows at meetings, and the meetings it did have ended up being readouts of statements, not frank discussions. Seven & i acknowledged the dropped offer Thursday and said it considered talks in good faith and constructively. 'We remain fully committed to our standalone value creation plan, which we have been pursuing in parallel, and to unlocking the value of our businesses, including our North American convenience store business. Our plan is concrete and actionable,' it said in a statement. Some analysts say Seven & i's management has not fully leveraged the business's global potential or delivered enough value to shareholders and could use better marketing, although its bottom line is unlikely to be affected by US President Donald Trump's tariff policies. The 7-Eleven franchise, which spans more than 85,000 stores in Japan, the US, and Europe, has a new chief executive, Stephen Hayes Dacus, the first foreigner tapped to head 7-Eleven. Dacus, an American with a Japanese mother who has experience at Walmart and Uniqlo, has promised a leaner business by focusing on the supply chain and tailoring shop offerings to various regions. For the first quarter of this fiscal year, Seven & i reported a doubling in profits to 49 billion yen ($330 million), mainly due to previously announced sales of property and equipment at its Ito-Yokado Co. retail chain. Quarterly sales held up as a favorable exchange rate helped some overseas earnings, according to the Tokyo-based chain. The seemingly omnipresent 7-Eleven chain speckles the streets of Japan, offering everything from stationery items and rice balls to hot coffee and utility bill payments.
Arab News
7 hours ago
- Arab News
Pakistan's Imran Khan orders party to stay silent on infighting, focus on protests
ISLAMABAD: Former prime minister Imran Khan on Wednesday urged party members to put aside their grievances amid reports of rifts within the Pakistan Tehreek-e-Insaf (PTI) and focus on the ongoing protest movement, reiterating that the time for negotiations with the government 'has passed.' Reports of a rift within the party began to emerge after Ali Amin Gandapur, a close Khan aide and Khyber Pakhtunkhwa (KP) chief minister, announced on July 13 that a 90-day 'do-or-die' protest drive against the government is underway. The protest call, however, appeared to contradict an earlier call for a nationwide protest posted on Khan's official X account, set to culminate on August 5. The day marks the second anniversary of the former prime minister's imprisonment on corruption charges. Speculation of conflicts within the party further grew after senior PTI leader and Punjab Chief Organizer Aliya Hamza Malik publicly voiced concerns on X about a lack of clarity around the campaign. Malik questioned the origin of the 90-day plan and asked for details on the party's strategy to secure Khan's release. According to a statement shared from his official X account, Khan told his family and lawyers at Adiala Jail where he is imprisoned, that he and others from the PTI are currently undergoing 'some of the harshest imprisonments.' 'Therefore, I direct every member of the party to put aside all personal grievances,' the statement read. 'Publicly airing internal matters or individual concerns before the media is entirely unacceptable.' Khan instructed his party members, both juniors and seniors, to avoid sharing 'internal differences' on social media, electronic media, print media or other platforms, urging them to 'focus exclusively' on the protest movement. 'If any party official fails to participate in this movement, I will make the final decision about them myself, even from within jail,' he warned. The cricketer-turned-politician directed the PTI leadership to decide about nominations for the party's Senate tickets through 'mutual consultation.' Khan urged his party supporters to continue protesting against the government. 'The time for negotiations has passed,' the statement said. 'What remains now is the time for the nation to rise in protest.' Pakistan's Information Minister Attaullah Tarar last week dismissed the party's protest call as a 'political gimmick.' 'PTI has lost street power and its credibility, and is heading toward irrelevance,' the minister said. Khan was ousted from the PM's office in a no-confidence vote in April 2022 and jailed in August 2023. Since then, the PTI has repeatedly mobilized street protests, including a large march to Islamabad in November 2024, to demand his release and challenge the legitimacy of the February 2024 general election. The government accuses the PTI of using the protests to incite instability and disrupt efforts at economic recovery. Punjab Information Minister Azma Bukhari said earlier this week that peaceful protest was a democratic right of every individual. However, she accused the PTI of abusing that right in the past. 'PTI has a history of violence and anarchy,' she told reporters. 'No political party is allowed to attack with weapons as Pakistan is our red line.' Hundreds of PTI supporters were arrested after riots allegedly incited by the party against the military on May 9, 2023. The government also says four soldiers were killed in November protests last year. PTI denies the charges.
Al Arabiya
8 hours ago
- Al Arabiya
Faced with geopolitics and trade war, US companies in China report record-low new investment plans
American companies in China are reporting record-low new investment plans for this year and declining confidence in profits, while uncertainty in US-China relations and President Donald Trump's tariffs have become their top concerns, according to a business survey released Wednesday. The companies are also challenged by China's slowing economy, where weak domestic demand and overcapacity in local industries are eroding profitability for the Americans. Businesses in China are less profitable now than they were years ago, but risks, including reputational risk, regulatory risk, and political risk, are increasing, said Sean Stein, the president of the US-China Business Council, a Washington-based group that represents American companies doing business in China, including major multinationals. The survey, conducted between March and May and drawing from 130 member companies, came after the two countries clashed over tariffs and non-tariff measures, including export controls on critical products such as rare-earth magnets and advanced computer chips. Following high-level talks in Geneva and London, US and Chinese officials agreed to pull back from sky-high tariffs and restrictions on exports, but uncertainty persists as the two sides are yet to hammer out a more permanent trade deal. Kyle Sullivan, vice president of business advisory services at the USCBC, said more than half of the companies in the survey indicated they do not have new investment plans in China at all this year. That's a record high, Sullivan said, noting that it is a new development that we have not observed in previous surveys. Around 40 percent of companies reported negative effects from US export control measures, with many experiencing lost sales, severed customer relationships, and reputational damage from being unreliable suppliers, according to the survey. Citing national security, the US government has banned exports to China of high-tech products such as the most advanced chips, which could help boost China's military capabilities. Stein argued that export controls must be very carefully targeted because businesses from Europe or Japan or local businesses in China would immediately fill the void left by American companies. Silicon Valley chipmaker Nvidia won approval from the Trump administration to resume sales to China of its advanced H20 chips used to develop artificial intelligence, its CEO Jensen Huang announced on Monday, though the company's most powerful chips remain under US export control rules. While 82 percent of US companies reported profits in 2024, fewer than half are optimistic about the future in China, reflecting concerns over tariffs, deflation, and policy uncertainty, according to the survey. Also, a record high number of American businesses plan to relocate their business operations outside of China, Sullivan said, as 27 percent of the members indicated so, up from 19 percent the year before. In a departure from past surveys, concerns over China's regulatory environment, including risks of intellectual property misuse and lack of market access, didn't make it to the top five concerns this year. That's likely a first, and not for a good reason, Stein said. It is not because things got dramatically better on the Chinese side, but the new challenges often coming from the US are now posing as much of a challenge, Stein said. Almost all the American companies said they cannot remain globally competitive without their Chinese operations. A survey from the European Union Chamber of Commerce in China in May found that European companies were cutting costs and scaling back investment plans in China as its economy slows and fierce competition drives down prices.
