Category: Business

The government has announced a reduction in the prices of petrol and high-speed diesel (HSD) by Rs10.2 and Rs2.33 per litre, respectively, for the upcoming fortnight. 

In a notification, the Ministry of Finance stated that the prices of petroleum products have exhibited a mixed trend in the international market over the past two weeks. The Oil and Gas Regulatory Authority (Ogra) calculated the new consumer prices based on these international market fluctuations.

The revised prices set petrol at Rs258.16 per litre and HSD at Rs267.89 per litre. 

The Prime Minister’s Office described the reduction as a gift from the premier in anticipation of the upcoming Eidul Azha. 

Sources previously indicated that the government intended to pass the benefits of lower international prices on to consumers. 

Over the past two weeks, the prices of petrol and HSD in the international market decreased by approximately $3.75 and $2.7 per barrel, respectively. This follows a significant drop of about $12 per barrel for petrol and $8 per barrel for HSD over the prior month.

The international price of petrol has decreased to just over $90 per barrel from about $94 per barrel, while the price of HSD has fallen to $95 per barrel from $98 per barrel.

The Weekly Sensitive Price Indicator (SPI) for the Combined Group saw a 1.3 per cent week-over-week increase during the week ending June 13, 2024, according to data released by the Pakistan Bureau of Statistics (PBS).

The SPI also showed a significant year-over-year rise of 23.03 per cent compared to the same period last year.

The Combined Index reached 313.93, up from 309.91 the previous week, and significantly higher than the 255.17 recorded a year ago.

During the week, out of 51 monitored items, prices of 19 items (37.26 per cent) increased, 8 items (15.68 per cent) decreased, and 24 items (47.06 per cent) remained stable.

Major price increases were observed in tomatoes (27.14 per cent), chicken (11.75 per cent), electricity for Q1 (8.73 per cent), pulse gram (7.19 per cent), and LPG (6.14 per cent). On the other hand, notable price decreases were recorded in onions (5.00 per cent), chilies powder (1.95 per cent), rice basmati broken (1.65 per cent), garlic (1.32 per cent), and rice IRRI (1.08 per cent).

The SPI percentage change by income groups indicated increases across all quantiles, ranging from 1.01 per cent to 1.31 per cent on a weekly basis. The lowest income group experienced a rise of 1.01 per cent, while the highest income group saw an increase of 1.29 per cent.

Yearly analysis of SPI changes across different income segments showed increases ranging between 16.29 per cent and 26.07 per cent. These statistics highlight the varying impact of price changes on different income groups, reflecting broader economic trends and inflationary pressures within the country.

The government is expected to reduce petrol price by an additional Rs9 per liter for the latter half of June 2024, offering some relief to the public amidst soaring inflation.

This anticipated reduction marks the fourth consecutive decrease, accumulating to a total relief of over Rs34 per litre.

In tandem with the petrol price cut, the government is also likely to lower the price of high-speed diesel (HSD) by approximately Rs5 per liter, reflecting the downturn in international market prices.

It is important to highlight that one more session remains before the final pricing update, which means that the exact figures will depend on fluctuations in global markets and the prevailing exchange rate.

The new prices will be officially announced at midnight on 15th June 2024 and will be effective for the subsequent 15 days.

In the most recent fortnightly adjustment, the government had reduced petrol and HSD prices for the third consecutive time by Rs4.74 and Rs3.86 respectively, bringing their prices to Rs268.36 and Rs270.22 per liter.

This series of price reductions aims to provide some economic respite to consumers amid a challenging economic environment.

Pakistan’s benchmark stock index (PSX), the KSE-100, experienced an unprecedented surge on Thursday, marking its most significant gain in a year.

This rally follows the government’s announcement of the 2024-25 budget, which alleviated concerns regarding potential increases in capital gains and dividend taxes.

The KSE-100 index soared by 3,410.7 points, or 4.7 per cent, reaching 76,208 points. This increase represents the largest single-day jump in point terms.

In the index’s history and the highest percentage rise since the International Monetary Fund (IMF) bailout package was introduced last year.

Investor sentiment remained overwhelmingly positive throughout the trading session. The index hit an intraday high of 76,338.15 points, an increase of 3,540.72 points, and a low of 73,329.80 points, still up by 532.37 points.

By the end of the day, the total volume traded on the KSE-100 index was 344.98 million shares.

Out of the 100 companies listed on the index, 87 saw their shares close higher, nine experienced declines, and four remained unchanged.

The government’s decision to set the capital gains tax at a flat rate of 15 per cent for filers on the sale of securities acquired on or after July 1, 2024, was a significant factor contributing to the market’s positive performance.

For non-filers, capital gains will be taxed at normal rates, with a minimum rate of 15 per cent and a maximum rate of 45 per cent.

This decisive move by the government has been well-received by investors, bringing clarity and stability to the market and fostering an environment of confidence and growth.

The Finance Bill 2024 has ushered in a significant overhaul of income tax slabs affecting salaried individuals, resulting in a marked increase in taxation across various income brackets.

The revised slabs, delineated in the amended bill, indicate substantial alterations compared to the previous structure.

Outlined below are the revised income tax slabs juxtaposed with their previous counterparts:

Taxable Income	Tax  per cent	Taxable Income (yearly)
≤600,000	0	less than 600,000
600,001-1,200,000	5 per cent of amount exceeding Rs600,000	600,001-1,200,000
1,200,001-2,200,000	Rs30,000 + 15 per cent of amount exceeding Rs1,200,000	1,200,001-2,400,000
2,200,001-3,200,000	Rs180,000 + 25 per cent of amount exceeding Rs2,200,000	2,400,001-3,600,000
3,200,001-4,100,000	Rs430,000 + 30 per cent of amount exceeding Rs3,200,000	3,600,001-6,000,000
>4,100,000	Rs700,000 + 35 per cent of amount exceeding Rs4,100,000	>6,000,000

While the income tax exemption for the initial slab, encompassing annual salaries up to Rs600,000, remains unaltered, adjustments have been made to other income brackets. Notably, the maximum income tax slab has been notably reduced from Rs6 million to Rs4.1 million.

Under the revised regime, individuals earning below Rs600,000 annually (equivalent to Rs50,000 per month) will continue to be exempt from income tax. However, for those falling within the range of Rs600,001 to Rs1,200,000 per year (Rs50,000 to Rs100,000 per month), the tax rate has been increased to 5 per cent from the previous 2.5 per cent on the amount exceeding Rs600,000.

Moreover, individuals earning between Rs1,200,001 to Rs2,200,000 annually (equivalent to Rs100,000 to Rs183,333 per month) will now be subject to a tax of Rs30,000 plus 15 per cent of the amount exceeding Rs1.2 million.

For those earning within the bracket of Rs2,200,001 to Rs3,200,000 per year (Rs183,333 to Rs266,667 per month), the revised tax stands at Rs180,000 plus 25 per cent of the amount exceeding Rs2.2 million.

Likewise, individuals earning between Rs3,200,001 to Rs4,100,000 annually (Rs266,667 to Rs341,667 per month) will face a tax liability of Rs430,000 plus 30 per cent of the amount exceeding Rs3.2 million.

Finally, for individuals with annual earnings surpassing Rs4,100,000 (more than Rs341,667 per month), the revised tax obligation stands at Rs700,000 plus 35 per cent of the amount exceeding Rs4.1 million.

These revisions underscore a significant shift in the taxation landscape, potentially impacting the financial planning and obligations of salaried individuals across the board.

In a pivotal and politically charged moment, Finance Minister Muhammad Aurangzeb presented his inaugural federal budget for the fiscal year 2024-25 on Wednesday, as Pakistan endeavors to secure a crucial long-term bailout from the International Monetary Fund (IMF).

Addressing the National Assembly, Aurangzeb underscored the government’s economic strides amidst significant financial and political hurdles over the past year. “The government’s progress on the economic front has been notable,” he affirmed in his opening statements.

The government has proposed a raise in the minimum wage from the current Rs32,000 to Rs36,000 in a bid to mitigate the inflationary pressure on citizens. According to the finance minister, the purchasing power of the populace has been impacted by rising inflation, prompting proactive measures to tackle the issue.

A prominent feature of the budget announcement was the federal cabinet’s endorsement of substantial salary increments for government employees. Those in Grades 1 to 16 will witness a 25 per cent salary hike, while employees in Grades 17 to 22 will experience a 20 per cent raise. Moreover, pensions for retired employees will see a 22 per cent increase.

Reflecting on the nation’s recent economic tribulations, Aurangzeb reminisced about a period when Pakistan’s economy was in dire straits. “The State Bank’s reserves were sufficient for less than two weeks of imports, the rupee depreciated by 40 per cent, economic progress was stagnant, and inflation was propelling more people below the poverty line rapidly,” he recalled. “Emerging from this situation seemed nearly insurmountable.”

The finance minister also lauded the previous government for securing a short-term standby agreement with the IMF, attributing it to bringing economic stability and averting uncertainty during a critical phase when the preceding IMF programmed was concluding, and negotiations for a new one were uncertain.

As Pakistan confronts these economic challenges, the newly unveiled budget along with the associated salary and pension increments are perceived as indispensable measures to stabilize the economy and fulfill IMF expectations, thereby laying the groundwork for future growth and stability.