April 26, 2020 (MLN): Below are the highlights of the important economic and business events witnessed during the last week that would play an important role in the context of Pakistan’s economy in this crucial time when the economy is facing multiple challenges due to COVID-19 pandemic.
On Friday, Asian Development Bank (ADB), President Masatsugu Asakawa and Pakistan’s Federal Minister for Economic Affairs and ADB Governor, Makhdoom Khusro Bakhtiar discussed how ADB could scale up its support for the government’s response to the novel coronavirus disease and requested ADB for early approval of Funds.
In the backdrop of the aforesaid discussion, Asian Development Bank assured to provide 1.7 billion dollars to Pakistan to fight the impacts of coronavirus. The assurance was given by the President of the bank during a virtual meeting with Minister for Economic Affairs Khusro Bakhtiar.
Meanwhile, the Government cut profit rates on National Savings Certificates, with new rates taking effect from April 24, 2020. According to a notification issued in this regard, the profit rate has been cut by 1.86% to 8.54% on defense certificate, and by 1.92% to 10.32% on behbood and pension certificates.
The same day, the Government of Pakistan launched Pakistan’s Preparedness and Response Plan (PPRP) in a bid to suppress and mitigate the spread of COVID-19. The initial Response Plan, worth US $ 595 million, is intended to strengthen Pakistan’s capacity in emergency prevention, preparedness, response, and relief and build health systems for a period of 9 months from April to December 2020.
On Thursday, Chairman SECP held a meeting with the Board of Directors of the Central Depository Company of Pakistan wherein the CDC Board updated the SECP on latest developments, especially in light of the COVID-19 pandemic, reforms that CDC has been undertaking, the status of different projects while identifying areas for future development.
On the downside, Moody’s Investors Service further reduced its forecast for Pakistan's GDP growth rate by 0.5% to 2% for FY20 due to the COVID-19 pandemic. Earlier, the IMF projected Pakistan's GDP growth rate to contract by 1.5%.
On Wednesday, amid the growing concerns of COVID – 19 pandemic, State Bank of Pakistan (SBP) advised Banks/DFI/MFB to suspend distribution of profits by way of declaring dividends in any manner (cash or stock) for the quarter ending March 31, 2020, and half year ending June 30, 2020, with a view to conserve capital and further enhance the lending and loss absorption capacity.
Furthermore, the Economic Coordination Committee (ECC) of the Cabinet approved the release of Rs 75 billion from Prime Minister’s Relief Package of Rs200 billion for targeted payments to the low-income groups, especially labourer’s and daily wagers most severely affected by the lockdown situation in the country.
Besides, the State Bank of Pakistan received $1.39 billion under rapid financing instrument by the International Monetary Fund (IMF) on Wednesday.
With regards to tax collection, the Federal Board of Revenue (FBR) is likely to set the revenue collection target at Rs5100 billion for the next fiscal year (2020-21), keeping in consideration the existing and post COVID-19 Corona Virus Pandemic situation.
Moreover, the Governor of State Bank of Pakistan, Dr Reza Baqir while giving an interview to Bloomberg said that SBP is the most aggressive Central Bank globally this year, due to the policy responses taken by it amidst the COVID-19 pandemic and is ready to do more to shield the economy of Pakistan.
On the equity front, Pakistan Stock Exchange has announced the abolition of Capital Value Tax (CVT) on the purchase value of modaraba certificates or any instrument of redeemable capital.
On Tuesday, Federal Cabinet decided to waive off various taxes on services relating to the construction industry. The cabinet meeting chaired by Prime Minister Imran Khan also decided to reduce tax on various services of the construction industry from five percent to zero.
On Monday, the analysts proposed the government that it should cut petroleum price by Rs. 10-15 per litre. They further suggested that the government should only reduce diesel price by Rs. 15 per litre and Mogas by Rs. 10 per litre which would help in reducing transportation costs, which in turn will reduce fruit, vegetable, and other product prices in Ramadan.
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