The Economic Coordination Committee (ECC) of the Cabinet on Monday decided to extend the concessional rate of withholding tax of 0.4 percent on banking transactions for non-filers up to March 15, 2016.

The ECC, which was chaired by the Finance Minister Ishaq Dar, reviewed the economic situation and also accorded approval for extension of reduced withholding tax rate for non-filers. The government had enhanced the withholding tax (WHT) by 0.1 percent to 0.4 percent on banking transactions of non-filers under section 236P of Income Tax Ordinance 2001 from March in bid to make its Voluntary Tax Compliance Scheme (known as amnesty scheme) successful.

Sources said that government would decide to enhance the WHT on banking transaction to 0.6 percent, as imposed in the budget, after Voluntary Tax Compliance Scheme expire on March 15. The government generated Rs13.7 billion from the WHT, from July to January of the ongoing financial year.

The top economic decisions making body of the country, the ECC, received a comprehensive briefing from Secretary Finance Dr Waqar Masood on the current economic condition. The committee was informed that almost all price indices pointed to lowest inflation in more than a decade. Similarly, the average inflation during July-February was recorded at 2.48%, with year-on-year inflation at 4%. The low inflation is likely to persist as Government has passed on lower prices for the month of March to consumers as well the production outlook of agriculture appears stable. The ECC was further briefed that world commodity prices outlook also points in the direction of stable and low prices as prices of key commodities such as sugar, wheat, rice, tea, soyabean, palm oil, crude oil, urea and DAP fertilizers have all registered significant reductions in the Jul-Feb period.

The ECC was also briefed that Pakistan’s Foreign Exchange reserves stood at $20.52 billion, as on 4th March 2016 wherein SBP reserves were $15.66 billion and commercial banks’ reserves were $4.86 billion. The SBP reserves had fallen to $2.8 billion in February 2014 and since then they have continuously risen to $15.66 billion, indicating a net official reserves build-up of about $12.9.

The meeting was informed that remittances, despite a high base of $18.7 billion during 2014-15, have risen by 6% during the period Jul-Jan 2015-16, which is well within the target set for the year. The current account for the period Jul-Jan 2015-16 stood at $2.04 as against $2.64 billion during the same period last year, showing an improved external position of the country. Foreign Direct Investment increased by 4.6% during the period July-Jan 2015-16 compared to the same period last year.

The ECC was briefed that tax revenues have registered an outstanding performance as during July-Jan 2015-16 the FBR revenues were up by 18.4%. Meanwhile, imports during July-Jan 2015-16 were down by 6.8% while exports were down by 11.4%, compared to the same period last year. However, trade balance for the same period improved by 1%.

The meeting also discussed the stocks of key commodities, which was satisfactory. The current wheat stocks amounted to 5.1 million tons against 5.4 million tons last year. Stocks of sugar were registered at 2.9 million tons against 2.5 million tons last year. Petroleum product stocks averaged 12 days compared to 11 days last year, with stocks of HSD standing at 25 days against 23 days and stocks of petrol standing at 15 days against 9 days last year.

The meeting was informed that Large Scale Manufacturing (LSM) registered a growth of 3.9% during Jul-Dec 2015 as against 2.7% for same period last year. The leading sectors were automobiles (32%), fertilizer (15%), chemicals (11.6%), rubber products (9.8%), pharmaceutical (6.8%), petroleum products (6.8%), non-metallic mineral products (6.7%), leather (1.2%) and textiles (1.0%). The generation of electricity during January 2016 was 11% higher than last year for the same month. Gas supply was higher by 1.5% during January 2016 compared to the same period last year.

Ministers for Commerce, Water & Power, MOS IT, Chairman Privatization Commission, SAPMs on Revenue, Law and Human Rights and concerned secretaries of ministries attended the meeting.

At the outset of the meeting the ECC directed that more consultations at inter-ministerial level on the Auto Policy be carried out and that the Policy should be brought for its (ECC) consideration in the next meeting.