Economy

Federal Budget 2014-15

Federal Budget 2014-15

budget-at-a-glance

  1. ISLAMABAD, June 3  Following are highlights of the Federal Budget 2014-15 presented by Finance Minister Ishaq Dar in the National Assembly here on Tuesday evening:
  2. •    Pakistan’s foreign exchange reserves likely to be US 15 billion by July this year.
  3. •    Foreign exchange reserves have now increased to US 13.5 billion dollars.
  4. •    Government brought stability to the Pakistani rupee and increased its value by 11%, since coming into power.
  5. •    Pakistani rupee parity with the US dollar is around Rs 98 to 99 per US dollar as compared to Rs 111 to a dollar in December 2013.
  6. •    Economy witnesses a growth rate of 4.14 per cent surpassing the figures in last six years.
  7. •    Now per capita income reaches $1386.
  8. •    Inflation remained at 8.6 per cent as compared to 12 per cent during the previous government.
  9. •    Fiscal deficit stood around 5.8% as against predicted 8.8%.
  10. •    Private investment reached 218% whereas export witnessed an increase by 4.25%.
  11. •    Benazir Income Support Programme (BISP) allocation enhanced to Rs118 billion in fiscal year 2014-15 witnessing an increase of 200 per cent.
  12. •    The social safety network for the poor segments would benefit about 480,000 families.
  13. •    First shipment of 200 mmcfd of Liquified Natural Gas (LNG) to be added to the system in a year.
  14. •    Process to acquire 350,000 tons of LNG at international market has been started to reinforce current energy supplies.
  15. •    Government succeeds in floating the Euro Bonds for two billion dollars against an initial target of 500 million dollars.
  16. •    Government announcs provision of up to Rs one million as housing credit to enable the poor to have their own houses across Pakistan.
  17. •    Introduction of 3G and 4G technology to create jobs for about 9,00,000 youth in the next four years.
  18. •    FBR revenues rise from Rs. 1,679 billion to Rs. 1,955 billion in the first 11 months of the current year.
  19. •    Remittances, which were recorded at $11.6 billion during July-April 2012-13, rise to $12.9 billion for the same period this year, showing an increase of 11.5%.
  20. •    Government has allocated a huge amount of over Rs 26 billion for health sector.
  21. •    Government has revived efforts to promote Islamic banking and financial system in the country.
  22. •    Number of beneficiaries under the BISP to be increased from 4.8 million to 5.3 million – an increase of 29% since 2012-13.
  23. •    Monthly stipend under BISP being enhanced by another 25% by raising it to Rs 1500.
  24. •    Government settled circular debt and added some 1700 MW in the national grid.
  25. •    3G-4G technology to create estimated 900,000 jobs in the next four years.
  26. •    PSDP to be increased from Rs.425 billion during 2013-14 to Rs.525 next year, an increase of nearly 24%.
  27. •    GDP growth to gradually rise to 7.1% by FY 2016-17.
  28. •    Inflation to be maintained in single digit throughout the medium term.
  29. •    Investment to GDP ratio will rise to 20% at the end of medium term.
  30. •    Fiscal deficit to be brought to down to 4% of GDP by 2015-16 and maintained at this level afterward.
  31. •    Tax to GDP ratio will be increased 13% by the year 2016-17.
  32. •    Pakistan’s foreign exchange reserves to be increased to more than $22 billion at the end of 2016-17.
  33. •    Government investing Rs.42 billion for water storage projects in various parts of the country.
  34. •    Rs.205 billion to be invested in power sector.
  35. •    Rs.25 billion allocated for land acquisition for Karachi-Lahore motorway this year and Rs.30 billion in the next year’s development budget.
  36. •    Government has allocated amounts for doubling of track from Khanewal to Lalamusa, covering a major portion of the north-south mainline.
  37. •    Allocations have been made for rehabilitation of track from Karachi to Khanpur and Khanpur to Lodhran.
  38. •    Allocations have also been made to strengthen and rehabilitate 159 weak railway bridges.
  39. •    Allocations have been made in the current budget to add more than 500 engines to the system through procurement and repair.
  40. •    Around 1500 new wagons/bogeys are also being arranged.
  41. •    Rs.20 billion allocated for 188 projects of the Higher Education Commission.
  42. •    Funding for the provincial programmes for population welfare has been kept at Rs.8.2 billion.
  43. •    Government, through the State Bank of Pakistan, to provide guarantee to commercial, specialized and micro finance banks for up to 50% loss sharing.
  44. •    The scheme will cover farmers having up to 5 acres irrigated and 10 acres non-irrigated land holdings benefiting 300,000 farmer households/families with a loan size up to Rs.100,000 with disbursement under this scheme will be Rs.30 billion.
  45. •    Crop loan insurance scheme introduced for farmers with landholdings of 12.5 acers. From this budget, the scope of CLIS premium reimbursement is being enhanced up to 25 acres.
  46. •    700,000 farmers households/families to benefit from this scheme. Total budget cost of the scheme is Rs.2.5 billion.
  47. •    Live Stock Insurance scheme to benefit 100,000 Livestock farmer households/families.
  48. •    Gross revenue receipts of the federal government for 2014-15 are estimated at Rs.3,945 billion compared to the revised figures of Rs.3,597 billion for 2013-14, showing an increase of 10%.
  49. •    Share of provincial governments out of these taxes will be Rs.1,720 billion as compared to Rs.1,413 billion revised estimates for 2013-14, showing an increase of about 22%.
  50. •    Net resources left with the federal government to be Rs.2,225billion compared to the revised estimates of Rs.2184 billion for last year.
  51. •    Government raises the level of provincial transfers over the last year from Rs.1,215 billion to Rs.1,720 billion.
  52. •    Total expenditure for 2014-15, is budgeted at Rs.3,937 billion compared to the revised estimates of Rs.3,844 billion for 2013-14, showing meager increase of 2% which is much lower than the inflation rate.
  53. •    The budgetary needs of our Armed Forces as per their needs have been duly provided in the budget.  •    The current budget is estimated at Rs.3,130 billion for 2014-15 against a revised estimate of Rs.2,935billion for 2013-14, showing an increase of 6.6%.

Pakistan Federal Budget 2014-15 PDF

 

The public, especially government employees, seemed depressed after listening to the speech of Federal Minister Finance, Muhammad Ishaq Dar in which he announced the Federal Budget 2014-2015.


  1. no relief in prices of items of daily use.
  2. no major relief for poor people in the budget speech as government once again imposed new taxes to transfer financial burden on the common man.
  3. The government increased prices of petroleum products by Rs 27.
  4. only 10% increase in salaries of government employees.
  5. imposed 17% tax on CNG.
  6. Increased prices of ‘atta,’ sugar, ghee, pulses, onion, potato and other items.
  7. government has increased only Rs1,000 from Rs10,000 to Rs11,000 fixed minimum wages.

Overall Federal Budget 2014-15 fails to cheer people up.

Federal Budget 2014-15

Federal Budget 2014-15

fdb3

Federal Budget 2014-15


0 107
wheat

Pakistan is set to become a net wheat importer this year with purchases climbing to the highest in five years after delayed planting and reduced fertilizer use hit domestic output and drove up local prices.

The South Asian nation, which has been exporting wheat for the last three years, joins a growing list of countries that have seen production curbed, squeezing global supplies and buoying prices.

Pakistan is likely to ship in 800,000 tonnes to 1mn tonnes of wheat in the year to March 2014, traders said, the most since 2008/09 and way up from the 200,000 tonnes bought last year. Supply will mainly come from the Black Sea region due to competitive prices offered there.

“We are have just finished the harvest and one would imagine that everything is alright but prices are moving higher,” said a Karachi-based grains trader.

“There is shortfall in the market as our production was well below the government’s target and there has been drawdown in stocks.”

Wheat production in Pakistan slid to 23.3mn tonnes in 2012/13, the lowest in four years and down from 25mn tonnes a year ago, according to the US Department of Agriculture. Output in 2013/14 is estimated at 24mn tonnes.

Traders said tighter domestic supplies would further jeopardise plans to export wheat to Iran under a 1mn tonne barter deal agreed last year that has been stymied by wrangling over details.

“Shipments haven’t taken place since last year and it is even more unlikely now,” said another trader in Karachi. “They keep on talking about it but we don’t believe it will happen.”

A Pakistani food ministry official said the deal was “still being decided”. Food imports are not affected by Western sanctions on Iran.

As part of the broad scheme, Iran last month agreed to take wheat worth $9mn from Islamabad in exchange for settling part of payment owed by Pakistan for electricity supply.

Pakistan’s wheat output has been hit by delayed planting caused by late harvests of other crops such as cotton and sugarcane. Farmers usually finish wheat seeding by November but that stretched right up to January this year in some parts of the country, traders said.

Reduced fertilizer-usage due to rising prices has also hit crop yields.

The decline in Pakistan’s wheat production mirrors similar drops in top exporters and producers the US, China, Russia and parts of Europe.

Although Pakistan’s estimated imports of 800,000 tonnes to 1mn tonnes are paltry in terms of global trade of 148mn tonnes, any additional demand for milling wheat will further strain global supplies.

China has been on a wheat buying spree after as much as 16% of its production was damaged by rains ahead of harvest. It is likely to surpass Egypt as the world’s top wheat importer.

Global wheat prices rose 2.4% in July on the Chicago Board of Trade even as corn and soybeans suffered deep losses on expectations of higher production.

Global wheat output is expected to rise this year from last, but will still be below demand, leaving the world with the lowest wheat stocks since 2008/09.

In Pakistan’s financial centre of Karachi, wheat prices have jumped to $340-$350 a tonne from the around $300-$310 a tonne typical at this time of year.

Pakistan is likely to source the bulk of its supplies from the Black Sea due to lower prices, traders said, adding that the country has already booked some 250,000 tonnes.

Authorities in Pakistan are under pressure from the industry and state governments to abolish a 5-% withholding tax on wheat imports which will bring down the cost of the imported grain.

The cabinet’s Economic Coordination Committee (ECC) is likely to take up the issue in the coming days, traders said.

“Prices in the domestic market are much higher than international prices,” said one Singapore-based trader who has been selling cargoes to Pakistan. “We think they will be active in the market for the next few months.”



wheat

Source>Wheat



US dollar brakes failed ! Read now

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Shanghai: China gold consumption will exceeds 1000 tonnes for the year 2013, reaching 800 tonnes in the first half, state-owned China NationaL Gold.

Some question arises at this point :

  • Why China is accumulation so much Gold?
  • Does China wants to back Yuan with gold and turn it into global currency ?
  • Does china want to replace U.S dollar with the Yuan as primary currency on the planet ?

The truth is that China doesn’t want to compete United States but wants to replace United States  from the Dominance of  Economic Power.

So what would happens if one day China says that they have backed yuan with gold and now they no longer need to use U.S dollar in international trade .

Previously China launched Gold Backed Global currency, by molding all their gold reserves into small kilo bars inorder to a new Gold Backed currency, causing collapse of U.S dollar & soon U.S dollar will be history.

Recently China & Russia building their Gold reserves. China has been notably relaxed about her own people acquiring gold, and the government itself appears to be absorbing all of China’s mine output. Russia is also building her official reserves from her own mine supply.

Further reason why Russia and China hoarding massive amounts of gold is to kill the petrodollar. (A petrodollar is a United States dollar earned by a country through the sale of its petroleum (oil) to another country) Since the 1970s, the U.S. dollar has been the currency that the international community has used to trade oil around the globe.  This has created an overwhelming demand for U.S. dollars and U.S. debt.  But what happens when the rest of the globe starts rejecting the increasingly unstable U.S. dollar and figures out that gold can be used as a currency in international trade?  The truth is that it doesn’t take a lot of imagination to figure that out.  Demand for the U.S. dollar and U.S. debt would fall off the map and there would be a rush into gold unlike anything we have ever seen before.  So are Russia and China accumulating unprecedented amounts of gold right now.



China and Russia see themselves as having much in common: They are coordinating security, infrastructure projects and cross-border trade through the Shanghai Cooperation Organisation.

China is the second largest economy on the planet, and nobody uses the dollar in international trade more than China does except for the United States.  Up until now, China has had to use the U.S. dollar in international trade because there has not been an attractive alternative.  But a gold-backed yuan would change all of that very rapidly.

And without a doubt, the Chinese government has already been very busy promoting the use of the yuan in international trade.  In a recent note, John McCormick of RBS Group stated the following…

” Financial crises in the US and Europe mean the world needs a new, more stable global reserve currency, and trade in RMB is growing rapidly. In the FX market, for example, our figures show that volumes are now worth around USD 5-6 billion daily – double what they were a year ago.A number of factors suggest that the Chinese authorities want to make RMB internationalisation happen by 2015.”

For China, having a global reserve currency is not just about economics.  It is also about power.

McCormick ended his recent note this way…

 China’s new leadership faces a number of problems. The country’s economy is slowing and, although we would expect the rate of GDP growth to pick up a little, it is unlikely to be a steep rebound.

But promoting RMB as a global reserve currency, with all the economic benefits that will bring in addition to exerting more political influence on the global stage, clearly remains high on their agenda.



Tax is money that people of a democratic country pays to their government. Taxes are of 2 types Direct taxation and Indirect taxation.

Direct Taxation : is simply the tax that levied on income/wealth of individual’s & Organisation’s

Indirect Taxation : Taxes that are place on Goods and services. E.g GST general sales Tax.

In Budget 2013 -14 very unexpected and unfriendly Taxation measures were taken. As a major revenue-generation measure announced in the federal budget, the standard rate of general sales tax has been raised from 16 percent to 17 percent to put direct burden of around Rs 55 billion on consumers.Instead if increasing direct taxation they have increased indirect taxes. This will effect the Pakistan’s economy and individuals daily routine.

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If the base of Taxation in Pakistan is not rectified and Individual’s with high incomes are not subjected to Taxation ( big fishes ) then its a threat to Pakistan’s economy. The economy runs on the taxation and for long term survival involvement of FBR in Tax corruption Should have to be solved.

In recent budget it seems like only one side is protected Tax burden increased on low and middle class instead of  upper class people who are enjoying lavish life .The major thing is to expand the taxpayers quantity by including more and more people to pay tax, but that’s not the rule to impose tax burden on working class which is previously subjected to taxation but to include those individual’s and industries that are not giving tax. There is a big example of  Riaz Malik the billionaire & business tycoon has some asked him that does he pay Taxes or how much is he paying taxes according to the wealth and properties he owned.

meme32

Now another thing is that why people don’t like to pay tax is because they don’t trust the government, E.g if you compare the private and public hospitals from there you can judge whether the government is deserved or worthy to get taxes . Higher the taxation on working group discourages them from working or paying taxes.

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Now another Question rises what is public getting after paying the huge amount of taxes , as you can see there are lot of problems like electricity , transportation , education, health and so many more hardships public is facing even they are paying taxes.

Overall Taxation problem has the same rank as electricity crisis that need to be solved. In many countries Progressive taxation is used to charge high taxes from high income earners to reduce social class gap but no such methods were used. Rich getting richer poor getting poorer.

Taxes should be imposed on the production on products that produce negative externalities and subsidies should be given on production of  goods with positive externalities.

Another thing happened that the  government impose GST increase before the bill is passed That’s totally is illegal.

eat the rich 08



0 295
shadow economy

The phrase “System D” comes from a slang phrase used in French-speaking Africaan d the Caribbean. The “D” stands for the French word “debrouillard”. Neuwirth: “To say a man is a debrouillard is to tell people how resourceful and ingenious he is.”

Global financial crises has given rise to shadow economy, or the black marker, or the underground economy comes as no surprise to economists, which as of 2011 has a projected GDP of $10T.

OECD in 2009 concluded that half the world’s workers were employed in shadow economy, and also predicts by 2020 shadow economy will employ two – thirds  of the world’s workers.

With time trade within system D has expanded and is not limited, which once was as simple as street merchant. Now system D is where the jobs are. Kids selling on street, vendors at flee markets, road side stands, are all part of System D.

According to Neuwirth (American journalist and author), “System D is growing faster than any other part of the economy, and it is an increasing force in world trade”. As such, System D “will be crucial for the development of cities in the 21st century”.

Neuwirth explains that based on estimates, the total value of System D globally is close to $10 trillion. In comparison, theUShas a GDP of $14 trillion. Thus, were System D a sovereign nation, it would be an economic superpower — the second largest economy in the world.

Neuwirth also argues that System D is the wave of the future for the global economy. From street selling to unlicensed trade to compensation under-the-table, many workers are off the grid. According to Neuwirth, System D is opening up the economy and providing new opportunities for those seeking income through labor.

The black market extends to illegal activities such  as murder, robbery, drug dealing, etc. but much of the shadow economy is made up of individuals for instance children selling on streets, road side stands or simple laborers being paid for services or repairs.

The issues behind the growth of the shadow economy seem to center more around actions of governments rather than inherent flaws and disparities within an economic system. As a government needlessly intervenes in an economy with asinine regulations and bureaucracy, it makes sense that the populace should embrace the shadow economy.

Governments must therefore make the official economy more attractive and reduce incentives that lead citizens to participate in the shadow economy.

INCPak Team.

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