ICCI demands withdrawal of SRO 608; equitable taxation system
ISLAMABAD (INP): Government should immediately withdraw SRO-608 to save business community from further problems and pursue a policy of equitable taxation system to broaden tax net in order to improve tax revenue, stressed Muhammad Shakeel Munir, Acting President, Islamabad Chamber of Commerce & Industry. He said all major chambers of the country have already expressed strong opposition to the levy of tax at retail level and called upon the FBR to withdraw SRO 608(I)/2014 as in the presence of huge smuggling and under invoicing, it would not be a possible for the government to achieve desired results from said SRO.
Shakeel Munir said at a time when the business community was facing many challenges including gas and electricity shortages and was looking for relief package from the government, FBR was adopting arm-twisting tactics by issuing anti-business SROs. He said the new taxation measures like SRO-608 were bound to create more difficulties to the efforts aimed at reviving business and economic activities.
He said it was unfortunate that instead of withdrawing concessions & exemptions and bringing all untaxed sectors into the tax net, government was taking coercive steps to squeeze the existing taxpayers. He said before implementing taxation at retail level, government should take strong policy measures to eliminate smuggling and under-invoicing.
Acting President ICCI said business community was fully cognizant of the need of improving tax-to-GDP ratio, but such objectives could not be achieved by taking unilateral measures, rather government could achieve positive results through facilitating traders and industrialists.
He was of the view that only a fair taxation system backed up by long-term stability could salvage the country out of current challenges and put it on sustainable economic growth.
S&P lowers Saudi, Oman outlook on low oil price
DUBA (AFP): Standard and Poor’s has lowered the outlook for the world’s top oil exporter Saudi Arabia to stable from positive and its Gulf partner Oman to negative on sliding oil prices. However, the ratings agency affirmed the strong “AA-/A-1+” long- and short-term foreign and local currency sovereign credit ratings for Riyadh over the “strong external and fiscal positions” it has built up in the past decade when oil prices were too high. “We base our outlook revision on our view that, although real economic growth remains relatively strong, we think Saudi Arabia is unlikely to achieve sufficient levels of nominal income to raise the ratings over the next two years,” S&P said.
It said low oil prices will place pressure on the kingdom’s gross domestic product (GDP) and per capita income which was reduced for the 2014-2017 period to $23,400 from $25,600 in June.
“We view Saudi Arabia’s economy as undiversified and vulnerable to a sharp and sustained decline in the oil price, notwithstanding government policy to encourage non-oil private sector growth,” S&P said late Friday.
Although Riyadh built fiscal reserves of around $750 billion from surpluses from high oil revenues, its public spending rose to record highs that raised the breakeven price for oil to between $85 and $93 a barrel.
Saudi Arabia pumps around 9.7 million barrels per day.
S&P said the hydrocarbons sector contributes about 45 percent of GDP.
The agency said the stable outlook reflects that Saudi Arabia will keep its very strong fiscal balance sheet and net external asset position, while monetary policy flexibility remains limited and dependence on hydrocarbons stays high.
For non-OPEC member Oman, S&P said the negative outlook was based on the view that the deterioration in the fiscal or external positions could be sharper than currently expected because of the steeper fall in oil prices.
S&P also affirmed Oman’s satisfactory “A/A-1” long- and short-term sovereign ratings on “strong net external and general government asset positions”.
“The ratings are constrained by our view that the quality of Oman’s public institutions and governance is moderate, that high fiscal, external and economic dependence on volatile hydrocarbons receipts will persist, and that monetary policy flexibility is limited by the (US dollar) pegged exchange rate,” it said.
Oil prices have lost more than a third of their value since June over a glut in output, weak demand and a strong dollar.
1.26m Pakistanis sent abroad for employment in 22 months
ISLAMABAD (APP): Ministry of Overseas Pakistanis and Human Resource Development has sent/registered 1.26 million Pakistanis for employment abroad during last 22 months. Sources at the Ministry said Pakistani emigrants proceed abroad through licensed Overseas Employment Promoters (OEPs), Overseas Employment Corporation (OEC) and direct employment visa on demand and criteria fixed by foreign employer. They said the selection of workers for employment abroad is carried out by the foreign employers themselves or through their representatives in the country.
IMF announces Ukraine rescue visit
KIEV (AFP): The IMF said on Saturday it would dispatch a team to Ukraine to determine how much extra aid the war-wrecked and energy-starved nation will need to make it through winter. The nine-day visit due to start on Tuesday comes as Ukraine suffers rolling blackouts and resentment grows over severe IMF-prescribed austerity measures. The Fund has helped piece together a $27b global rescue package—promising to contribute $17b of that sum over two years—in the weeks that followed the February ouster in Kiev of a Russian-backed president. But it has since said the new pro-Western govt may need at least $19b in additional assistance should its war against pro-Russian insurgents in the eastern industrial heartland drag on through the end of 2015.
The IMF’s Kiev representative Jerome Vacher said only that “the mission will begin policy discussions with the Ukrainian authorities in the context of the Fund-supported economic reform programme.”
Yet its arrival will also deliver a vote of confidence in the reformist cabinet that President Petro Poroshenko put together after weeks of political infighting that left Ukraine’s Western supporters frustrated and dismayed.
The finance ministry is now headed by Natalie Jaresko, a US citizen who once worked in the State Department and more recently held a senior post in a private equity firm in Kiev.
The Lithuanian investment banker Aivaras Abromavicius will serve alongside her as economy minister. Both were handed Ukrainian passports by Poroshenko just hours ahead of their confirmation by parliament.
“These appointments raise expectations that Poroshenko and (Prime Minister Arseniy) Yatsenyuk are going to move swiftly against corruption and on other key issues that will transform Ukraine’s economy and governance,” said John Herbst of the Washington-based Atlantic Council think tank.
- Russian gas payment -
The Fund is next due to mete out a $2.7-billion payment that comes on top of $4.6 billion delivered by early September.
The money has been essential for Kiev—its foreign currency and gold reserves last month dropped to less than $10 billion for the first time in nearly a decade because of the draining toll of the war.
The fighting has shuttered the east’s factories and left the rest of Ukraine desperately short of the coal needed to generate electricity used by industries and households.
A deal for Kiev to make up for the shortfall by buying 100 million tonnes of coal from South Africa fell apart this week due to graft charges that led to the arrest of the head of Ukraine’s main state energy firm.
But the Fund’s money has helped Ukraine pay back debts to Russia that should see natural gas flows—halted by Moscow in June because of a price spat—resume within a matter of days.
Russia’s state-run gas firm Gazprom said it had just received $378 million from Kiev that should cover the delivery of one of the four billion cubic metres that Ukraine plans to purchase in the coming months.
“We will provide the volumes Ukraine needs for its domestic consumption,” Russia’s RIA Novosti news agency quoted Gazprom boss Alexei Miller as saying.
But Russia’s “deliveries to Europe will be made using an alternative route,” he added.
The comment underscores Moscow’s commitment to cut off Kiev’s pro-European leader from the fees they generate from Russian gas transits.
Russia this week abandoned plans to build a gas pipeline that would circumnavigate Ukraine by running under the Black Sea, but it still has a link that crosses the Baltic Sea to Germany.
Russian President Vladimir Putin said on a visit to Ankara on Monday that he also intended to boost gas exports through Turkey.
Dollar gains on robust US jobs report
NEW YORK (AFP): An unexpectedly strong US jobs sent the dollar sharply higher against the euro, yen and others. The US ability to churn out some 321,000 news jobs in Nov— 90,000 more than had been predicted—underscored the country’s divergence with Europe and Japan, both fighting off stagnation. The jump in job creation raised the chance, some analysts guessed, of an acceleration in the Fed’s move toward an interest rate hike, currently forecast for the middle of 2015. Yields on medium-term Treasury bonds shot up 10 basis points on the data,. The report also showed the first hints of a possible quickening pace of wage gains—something that would make the inflation-focused Fed sit up and take notice.
“Throughout this year, the Fed has been generally satisfied with the absolute number of jobs created, but the missing ingredient in the recipe for a rate hike has been wage growth,” said Matt Weller at Forex.com.
“While it is only a one month sample, this much stronger rate of wage growth suggests the potential for demand-pull inflation, and an accompanying interest rate hike, in the first half of next year.”
The dollar pushed to $1.2283 per euro, the greenback’s best level since August 2012, and to 121.44 yen, the highest since July 2007.