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Express Tribune
a day ago
- Business
- Express Tribune
Govt urged to end bank subsidies
Listen to article An independent think tank has urged the government to choose between subsidising already-profitable banks or diverting limited fiscal resources toward productive sectors by ending the policy of banks guaranteed returns on government borrowing. The Economic Policy and Business Development (EPBD), a new policy research institute, released the statement the same day a federal cabinet body criticised excessive subsidies to banks in the name of attracting remittances. The Economic Coordination Committee (ECC) of the Cabinet was informed Friday that banks had claimed Rs200 billion under the Pakistan Remittances Initiative during the current fiscal year — Rs115 billion more than the budgeted subsidy. The EPBD stated that the current fiscal structure forces a choice between supporting economic growth and subsidising banking profits through guaranteed government payments. It argued that Pakistani businesses face structural disadvantages compared to regional peers who enjoy policies that enhance rather than restrict productive economic activity. The think tank stressed that economic growth requires policy alignment with development objectives — not bank profit maximisation. The current approach of keeping policy rates at 11% while allocating Rs7.2 trillion for domestic debt servicing ensures stagnation, while regional competitors grow their industrial and export capacity. The government has allocated Rs8.2 trillion for total debt servicing — equal to 46% of the 2024-25 budget. Of this, Rs7.2 trillion will go to domestic banks holding government securities. With 59% of public debt held in floating-rate instruments, the think tank argued that reducing policy rates from 11% to 6% would yield immediate savings. The government worsened this burden by issuing Rs2 trillion in fixed-rate Pakistan Investment Bonds (PIBs) at peak interest rates of 22% over the past two years, locking in excessive costs to the benefit of banks, it added. By cutting interest rates to 6%, in line with falling inflation, the government could save Rs3 trillion on debt servicing. Even a portion of this amount, the think tank said, could lower business costs and stimulate employment. A 6% rate would still offer banks real returns while easing debt burdens. The savings could support manufacturing revival, industrial expansion, SME financing, technology upgrades, and export growth. The statement added that Pakistan's future depends on diverting resources from guaranteed banking profits to investments that create jobs, enhance productivity, and ensure long-term growth. Pakistani businesses cannot expand or generate employment while banks earn risk-free profits from public funds. In contrast, regional economies maintain 5.5% policy rates, allocate only 25% of budgets to debt servicing, and still achieve 6% GDP growth by prioritising business development. The EPBD challenged the claim that lower interest rates fuel current account deficits. It cited the $19 billion deficit in 2021-22, which it attributed to exceptional, non-interest-sensitive imports such as $3.2 billion in COVID-19 vaccines, $15.6 billion in fuel, and $1.7 billion in smartphones. It said high interest rates did nothing to limit those imports and instead suppressed domestic activity. The think tank added that guaranteed profits have led banks to retreat from commercial lending, opting instead for risk-free government bonds. With 97.3% of bank investments tied up in government debt, virtually no capital remains for working capital, expansion, or technology adoption. Manufacturers struggle to finance inventory, exporters lose global competitiveness, and small businesses are excluded from credit. Pakistan's banks have effectively become bond traders, contributing no value to the real economy while earning from taxpayer-backed securities. The think tank also criticised the remittance structure, noting that Rs87 billion went to banks for basic transfersfunds that could instead support small businesses and entrepreneurship. Its statement came as the ECC met to deliberate the future of remittance-linked subsidies. The finance ministry has decided to end the subsidies in 2024-25 due to pressure from banks and International Monetary Fund (IMF) constraints. The State Bank of Pakistan told the ECC it could no longer offer implicit support under IMF rules. Although the ECC requested a transition plan, the finance ministry said no study has determined any positive impact of these subsidies. Officials noted that funds largely benefit banks and exchange companies, not overseas Pakistanis sending remittances. The central bank informed the ECC that remittance promotion schemes have existed since 1985, but their effectiveness remains unverified. Without reform, the remittance subsidy bill could swell to Rs500 billion in coming years, warned a finance ministry official. The think tank reiterated that businesses do not need subsidies or special treatment — just a level playing field. Reducing interest rates to 6% would bring Pakistan in line with regional rivals, restore manufacturing competitiveness, and improve global market access for exporters. Such a move would also accelerate technology adoption and job creation across sectors, the EPBD argued. Although manufacturing capacity exists, it remains underutilised due to lack of financing. With 97% of banks' balance sheets locked in public debt, there is little scope to support private sector growth. Regional countries have demonstrated that supporting businesses through growth-oriented credit policies can deliver 6% growth while maintaining fiscal stability, it added.
Business Recorder
10-06-2025
- Business
- Business Recorder
Govt unveils ambitious digital overhaul for FBR in Budget 2025–26
The Federal Board of Revenue (FBR) is set to undergo a sweeping digital transformation as part of the government's strategy to modernise Pakistan's tax administration and improve revenue collection, according to the federal budget speech presented by Finance Minister Muhammad Aurangzeb for FY2025–26 on Tuesday. Aurangzeb presented the federal budget for the second time as the coalition government sought to revive the economy, meet the International Monetary Fund (IMF) benchmarks and provide some relief to the tax-weary masses. FBR Tax Target The Federal Board of Revenue (FBR) is assigned to collect Rs14.13 trillion in FY26, up 19% as compared to Rs11.9 trillion revised estimates for FY25. The tax collection for FY26 includes Rs6.9 trillion in direct taxes and Rs7.2 trillion in indirect taxes. Key components of the transformation The reform plan includes a nationwide rollout of Digital Production Tracking, aimed at monitoring manufacturing output and linking it with digital invoicing systems. This move is expected to reduce underreporting of production and ensure greater documentation of business activity. To further strengthen documentation, the FBR is expanding business-to-business (B2B) e-Invoicing, making it mandatory across multiple sectors. The plan also includes deeper integration of the Point of Sale (POS) system for retailers and the deployment of an E-way Billing framework to digitally track the movement of goods. In a significant shift away from traditional audit practices, the FBR will fully implement Faceless Audit and Faceless Customs Audit systems. These aim to eliminate human discretion in audit processes, reduce corruption, and improve taxpayer confidence. Technology-led enforcement Artificial Intelligence (AI) will be used for risk-based audit selection, while fraud analytics tools will support customs enforcement and refund scrutiny. A Central Control Unit is being established to provide real-time visibility and centralised oversight across all enforcement and compliance operations. Workflow digitisation is also being prioritised, with automated alerts and a digital case management system intended to expedite processing and enforcement without bureaucratic delays. Institutional support and capacity building The transformation will be supported by the PRAL Board, which will oversee IT governance and system upgrades. Additionally, the government plans to introduce 'Audit Mentors' within the FBR to guide staff through the transition and promote digital literacy. According to budget documents, these reforms are not only targeted at boosting the tax-to-GDP ratio – currently one of the lowest in the region – but also at aligning Pakistan's tax administration with global best practices. What this means for taxpayers For taxpayers and businesses, the FBR's digital push signals a future of increased compliance obligations but potentially fewer bureaucratic hurdles. E-invoicing, production tracking, and centralised audits will make non-compliance harder and speed up legitimate processing. The government's digital transformation agenda is expected to gain traction over the fiscal year, with multiple milestones scheduled for rollout through FY2026.
Business Recorder
28-05-2025
- Business
- Business Recorder
NA panel irked by ‘non-professional' attitude of KE CEO
ISLAMABAD: The National Assembly Standing Committee on Industries and Production, Tuesday, expressing serious anger over the informal, unofficial and non-professional response of K-Electric (KE) chief executive officer (CEO) observed that the officer seemed unfit for the key position. The committee meeting held here under the chairmanship of Syed Hafeezuddin to discuss matters pertaining to Utility Stores Corporation (USC) and K-Electric. The committee members question CEO K-Electric why it has not withdrawn court cases regarding power subsidies provided to various consumers during coronavirus crisis. Responding to the queries of committee members, K-Electric Moonis Alvi expressed his inability to withdraw court cases, which made the committee members furious and declared his response an insult to the directions of parliamentary panel. The CEO K-Electric tendered his apologies but the committee members rejected his apology and expelled him from the meeting. The panel grilled the Federal Board of Revenue (FBR) for failing to implement its directives regarding the inclusion of the iron and steel sector in the Export Facilitation Scheme. The committee held FBR responsible for a potential loss of $1.5 billion in exports due to the delay in issuing the required Statutory Regulatory Order (SRO). Expressing strong disapproval, the chairman remarked that FBR was ignoring parliamentary instructions and announced a formal notice against the department. The frustration was further fuelled by the continuous rotation of FBR representatives at committee meetings. 'First, an FBR lady used to come, then Faisal used to come, and today another gentleman has come; we will bear him too,' the chairman remarked sarcastically, urging the media to highlight the FBR's conduct. Another pressing matter discussed was the financial crisis facing the Utility Stores Corporation (USC). With Rs7.2 billion reportedly dues from the corporation, FBR officials claimed USC had demanded Rs18.50 billion. The chairman urged both sides to resolve the dispute immediately to prevent employee layoffs. 'We want Utility Stores employees not to be unemployed,' Hafeezuddin said, assuring union representatives that their jobs would be protected. Throughout the session, the committee emphasised accountability across public and private institutions and made it clear that delays, defiance, or neglect of parliamentary directions would not be tolerated. The committee decided to present a unanimously agreed report on the closure of USC during the Session to safeguard the future of USC employees. It sought a detailed report by Pakistan Services for Quality Standard Authority on less export of Pakistan dairy products, meat and honey. The standing committee issued key recommendations during its sitting debating the issues of K-Electric regarding load shedding in industrial sector of Karachi, closure of Utility Stores Corporation's sacked employees, role of Pakistan Services for Quality Standards Authority in maintaining vehicle quality standards and agriculture-related products for local use and export to USA, UK and European countries. The committee assured its support to the ministry for legislation when and where required to remove hindrances in the progress of public benefits. Copyright Business Recorder, 2025
Express Tribune
16-05-2025
- Express Tribune
Man accused of swindling doctor
A case has been registered against a person who looted Rs3.35m from a homeopathic doctor in exchange for a plot. Homeopathic Doctor Muhammad Asif Mushtaq Shaheen, a resident of C Block Ghulam Muhammad Abad, took the stand in the case filed with the police that he was in the business of buying and selling of property and vehicles with Rehman, a resident of Zunariha Town. He further stated that he wanted to sell a car through his friend Rehman, so he met the accused Muhammad Tanveer Latif, resident of Mohalla Abbas Nagar. He fixed the price of the car at Rs7.2 million, in return for which the accused Tanveer showed a plot of 6 marla at 219 RB and gave him the Fard (papers of plot), and paid the remaining amount. "During this time, I listened to the accused and got the car registered in his name, along with giving him the original file and other documents." The accused asked him to transfer the plot immediately, but later, refusing to transfer the plot, he embezzled Rs3.35 million through forgery. The Ghulam Mohammadabad police registered a case under sections 420-468 of the penal code of Pakistan and started searching for the accused.
Hans India
10-05-2025
- Business
- Hans India
India's IT sector logs 16% growth in hiring on AI boost
Bengaluru: Information technology (IT) sector in India is witnessing strong growth, with hiring activity increasing by 16 per cent year-on-year (YoY) in April 2025, a new report said on Friday. A major driver behind this growth is the rapid expansion of Global Capability Centres (GCCs), which have created over 110,000 new tech jobs during the financial year 2024-25, according to data compiled by jobs platform foundit (formerly Monster APAC and ME). This hiring boom comes despite an 11 per cent month-on-month dip in April, which the report attributes to seasonal trends. Overall, the outlook remains positive, with consistent demand across experience levels and an increasing focus on specialised, future-ready skills. According to V Suresh, CEO of foundit, the sector is entering a new phase of 'strategic growth'. He emphasised that India is moving from quantity-based hiring to skill-based, innovation-led employment. 'This transformation reflects India's broader vision to empower its youth for global leadership in science and innovation,' he said, adding that tier-2 cities are becoming important contributors to the digital economy. GCCs are playing a central role in this shift, especially in areas like data engineering, DevOps, and enterprise architecture. The move reflects a larger transformation in India's IT hiring -- from mass recruitment to quality-focused hiring based on in-demand skills, the report said. It highlighted a growing demand for roles in artificial intelligence, cloud computing, cybersecurity, and data analytics. These areas together now make up 95 per cent of job postings in the IT sector. Further, employers are more focussed on practical expertise than on formal degrees, with 62 per cent of companies now prioritising skills over qualifications. In terms of salaries, specialised roles are offering impressive packages. Entry-level AI roles start at Rs7.2 lakh per annum, while experienced professionals in AI can earn up to Rs76.4 lakh. Cybersecurity remains one of the highest-paid domains, with top salaries reaching Rs 87 lakh.
