Govt defers auto policy


ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has extended the period for reduced rate of 0.4 per cent withholding tax on bank transactions for non-filers of income tax returns, besides deferring the auto policy to the next meeting for more consultation.

Finance Minister Ishaq Dar, who chaired the ECC meeting on Monday, also reviewed the overall economic situation.

The WHT, which was originally set at 0.6pc in the latest budget, will continue to be 0.4pc until March 15.

The government has already extended the amnesty scheme for traders until the same date.

The ECC extends reduced wht on bank transactions to March 15 for non-filers

At the outset of the meeting, the ECC directed that more consultation at the 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.

Secretary Finance Dr Waqar Masood gave a comprehensive briefing to the ECC on the current economic condition.

He said almost all price indices pointed to the lowest inflation in more than a decade. He said average annual inflation during July-February 2015-16 was recorded at 2.48pc, while it was 4pc in February.

He said low inflation was likely to persist as the government had passed on the benefits of lower prices to consumers, while the production outlook of agriculture also appeared stable.

Outlook for world commodity markets also pointed in the direction of stable and low prices as rates of key commodities such as sugar, wheat, rice, tea, soybean, palm oil, crude oil, urea and di-ammonium phosphate (DAP) fertilisers have all registered significant reductions in the July-February period.

The secretary informed the ECC that the position of stocks of key commodities was satisfactory. The current wheat stocks amounted to 5.1 million tonnes against 5.4 million tonnes last year. Stocks of sugar were registered at 2.9 million tonnes against 2.5 million tonnes last year.

Petroleum product stocks averaged 12 days compared to 11 days last year, with stocks of high-speed diesel (HSD) standing at 25 days against 23 days and stocks of petrol standing at 15 days against nine days last year.

On large-scale manufacturing (LSM), the secretary said it grew by 3.9pc during July-December 2015 as against 2.7pc for the same period last year. The leading sectors were automobiles (32pc), fertiliser (15pc), chemicals (11.6pc), rubber products (9.8pc), pharmaceuticals (6.8pc), petroleum products (6.8pc), non-metallic mineral products (6.7pc), leather (1.2pc) and textiles (1pc).

The generation of electricity during January 2016 was 11pc higher than the same month last year. Gas supply was higher by 1.5pc during January 2016.

Tax revenues rose 18.4pc during July-January 2015-16, the secretary said.

Imports during the seven-month period fell 6.8pc while exports were down by 11.4pc compared to the same period last year. However, trade balance for the same period improved by 1pc.

Regarding external account, the secretary said foreign exchange reserves stood at $20.52 billion as on March 4, 2016. Of this, the State Bank of Pakistan held $15.66bn and commercial banks had $4.86bn.

The SBP reserves, which dropped to $2.8bn in February 2014, have been on a continuous rise, indicating a net official reserves build-up of about $12.9bn.

Remittances, despite a high base of $18.7bn during 2014-15, rose by 6pc during July-January 2015-16, which is well within the target set for the year.

The current account for the period stood at $2.04bn as against $2.64bn during the same period last year.

Foreign direct investment increased by 4.6pc during the period compared to the same period last year.

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