Pakistan has officially requested the United Arab Emirates (UAE) to provide information on all Pakistani citizens who have obtained Ikama (work permit) to hide illegal interest. Under the UAE law, foreigners can obtain Ikama based on investments that exceed certain thresholds. This problem became important in Pakistan with 3,620 accounts received from the UAE reported to Islamabad. However, you can ignore accounts with high balances.
Important in comparison
This is not contrary to our expectations, nor is it important in comparison with other exchange partners in Pakistan," said a letter written by Prime Minister Mohammad Ashfaq Ahmad of Younis Haji Alkhoori, UAE Finance Minister. Dr. Ahmad pointed out that there is nothing wrong with the people of Pakistan who are legally investing and doing business in the UAE with legally remitted funds. We are very concerned about those who have illegally deprived us of money from Pakistan and who are currently hiding Ikama-based housing to bypass reporting under the CRS," he added.
Desirable situation for two countries, especially Pakistan. The UAE Treasury needs to guide and support this issue. Legally speaking, Articles 26 and 27 of the Pakistan-UAE Double Taxation Treaty support a formal and structural deliberation on mutual or unilateral matters. Pakistan and the UAE signed a double taxation and anti-financial agreement on taxes on 13 February 1993. The two countries have historically maintained an active exchange of information between them.
The sighs of the OECD-Multilateral Convention (OECD-MC) on mutual administrative assistance on tax matters have been reinforced. In addition, Pakistan and the UAE are actively implementing the automatic exchange of information for banking and financial account information in accordance with a multilateral jurisdiction agreement, a common reporting standard signed by the OECD-MC.
The first exchange of bank and financial account information under the contract will take place on September 30. An official said a delegation of tax officials will visit the UEA and meet with the other party in the first half of September. Visits should be approved by the prime minister to facilitate the exchange of information requests.
Sensitive Price Index for people
In July, Pakistanis had to pay 14.8% more for 53% of their essentials than a year ago. Over the previous year, the price increase of these 53 items in July 2018 was only 4.5pc. On the technical side, annual inflation, measured through the Sensitive Price Index (SPI) for people in all income groups, was 14.8 pcs compared to 4.5 pcs last month in July 2018. For 20pc people in the lowest income group, SPI inflation was 12.2pc in July, compared to 3.6pc a year ago. Pakistan Statistical Office (PBS) released the latest update without reading in the previous year. There is a footnote in the PBS Inflation Report.
Let's take a look at how the prices of these 53 essential items moved in July 2019. The prices of the four items did not change. The price of the other four items fell. The remaining 45 items have a higher price. According to PBS statistics, prices of almost all major foods, including wheat and flour, Indian rice, beef and lamb, fresh milk and milk powder, tofu, cooking oil and vegetable butter, legumes and potatoes, onions and garlic, tea, and sugar climbed went.
The government has not been able to maintain inflation even for the lowest earners so far. The price increase for this item was mainly in two digits. What to do if the average price of chicken, eggs, tomatoes is slightly reduced According to PBS data, gas prices increased by about 72pc and gasoline prices increased by 17pc. What if the price of an 11kg LPG cylinder drops by 0.35pc? The government has quietly raised gasoline, diesel and kerosene prices above Rs5 per liter since August 1.
The PTI government
To date, PTI government has not been able to sustain inflation even for low-income people. And it continues to demand that Pakistan must sacrifice to build a new Pakistan. Even the poorest are facing 12.2pc inflation, so have they sacrificed enough to get a better time? As SPI inflation accelerates further, PTI will find it too difficult to maintain political capital based on promise. Pakistan currently participates in the IMF loan program and there is little room for the poor to confirm inflation through supply-side adjustments and subsidies.
Conversely, the country is expected to maintain a tight monetary policy and make the view of future inflationary pressures more stringent. That's why former Treasury Secretary Asad Umar warned not to expect a moratorium on high inflation until December. In July, annual inflation, measured through the broader CPI, also rose to 10.3 pcs compared to 5.8 pcs in July 2018. The Wholesale Price Index (WPI), which measures the factory shipping price of goods, increased by 13.5pc. July at 10.5pc a year ago.
Analysis of CPI inflation showed that the price of food components in 487 items of consumer and service baskets increased 9.2pc per year in July compared to 3.5pc a year ago. Non-food annual inflation was 11.1pc compared to 7.4pc in July 2018. Tax collection below the July target indicates that the government may not be able to meet its tax target of 5.5 trillion rupees per year.
Along with the increase in spending due to the current national security situation, the collection of revenues can slip, resulting in a deficit larger than the target. Doesn't the government print additional call notes? Won't you get higher inflation? Or is the government not borrowing too much from banks to bridge the fiscal gap? Doesn't it increase domestic debt service costs while limiting government to reduce development spending.
It also depends on whether
It may take some time for inflation and the unemployment rate to recede. It also depends on whether the government can solve external sector problems with less debt exports, remittances and reduced borrowings by international financial institutions. The Kashmir issue has brought the most ugly changes, and the overall national security situation is tense. The target forex inflow may or may not be realized.
Managing India's economy can be even more difficult if India relies more on the wrong adventures on the control line and Pakistan exercises its right to respond. Under unusual circumstances, ensuring exchange rate stability will be a bigger challenge as countries are participating in IMF programs. Decreasing the rupee value could lead to higher inflation. So the situation is at stake.
To control food inflation, agricultural growth should be a priority. This is important to give some relief to ordinary people. It should also be taken into account if it is necessary to postpone the removal of some planned energy and agricultural subsidies. The IMF must be persuaded to give up some of the conditions in which these grants are urgently removed.