Govt to announce package to boost economic activities

ISLAMABAD – The government is likely to announce an incentives package to boost the economic activities in the country within next few days, which would include measures to reduce the cost of production.

“Prime Minister Shahid Khaqan Abbasi is likely to visit the office of Federation of Pakistan Chambers of Commerce and Industry in next few days, where he will announce the economic plan,” said Zubair Tufail, president of FPCCI, while talking to The Nation on Saturday. The plan would help in increasing country’s exports to control soaring current account deficit, he added.

The business community had recently held meetings with Prime Minister in Islamabad and demanded to reduce the power tariff by Rs3 per unit to Rs9 per unit besides reducing gas infrastructure development cess. They had also asked for issuing sales tax refunds on time, reducing cost of doing business, providing equal opportunities to Pakistani investors in CPEC, reduction in taxes, revamping of Trade Development Authority of Pakistan (TDAP)/expo centers and abolishment of withholding tax.

However, the Prime Minister, after consulting with Ministry of Finance, Federal Board of Revenue and other ministries, will decide about the incentives package for the business community. 

The government wants to enhance exports to control the widening current account deficit (CAD) of the country. The CAD has almost doubled to $6.430 billion in the first five months (July-November) of the current fiscal year of 2017/18 as a widening trade gap offset growth in external inflows on account of foreign direct investment and remittances. The State Bank of Pakistan’s (SBP) figures showed that current account deficit stood at $3.371 billion in the corresponding period a year earlier.

Pakistan faces an external financing gap of around $12 billion in the current fiscal year. Pakistan’s gross external financing requirements are around $20 billion including a projected $14-billion current account deficit and $5.9-billion foreign debt repayment for ongoing financial year. However, out of $20 billion, the government has around $9 billion, which leaves net financing gap of about $11-12 billion.

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