That is a sharp shift from just a week ago, when Chair Jerome Powell suggested to a Senate committee that if inflation didn’t cool, the Fed could raise its benchmark interest rate by a substantial half-point at its meeting March 21-22. When the Fed raises its key rate, it typically leads to higher rates on mortgages, auto loans, credit cards and many business loans.
When measured against prices a year ago, inflation has been easing for eight months. In February, consumer prices climbed 6% from 12 months earlier, down from January’s 6.4% year-over-year increase and well below a recent peak of 9.1% in June. Yet it remains far above the Fed’s 2% annual inflation target. Core prices in February rose 5.5% from 12 months ago, down slightly from 5.6% in January.
Inflation pressures remain entrenched in much of the economy. Rents, grocery prices and the cost of hotels, restaurants and airplane flights have all been surging as more Americans seek housing and spend money on traveling, dining out and attending entertainment events.
Jan Hatzius, chief economist at Goldman Sachs, said Goldman now thinks the Fed’s policymakers will pause their rate increases next week. Goldman had previously predicted a quarter-point hike. In a note to clients, Hatzius noted that the Fed, for now, appears even more focused on calming the banking sector and the financial markets than on fighting inflation.
“We would be surprised if, just one week after going to great lengths to support financial stability, policymakers risked undermining their efforts by raising interest rates again,” Hatzius wrote in a separate note Monday.
If the Fed does pause its rate hikes this month, Hatzius predicted, it will likely resume them when it next meets in May. Ultimately, he still expects the Fed to raise its key rate, which affects many consumer and business loans, to about 5.4% this year, up from the current 4.6%.
The Fed may get some unintentional help in its inflation fight from the aftereffects of the collapse of Silicon Valley Bank and New York-based Signature Bank. In response, many small and medium-size banks may pull back on lending to shore up their finances. A lower pace of lending could help cool the economy and slow inflation.
The possibility of a Fed pause underscores the sharp shift in the nation’s financial system and economy in barely one week. Last Tuesday, Powell had told the Senate Banking Committee that if hiring and inflation continued to run hot, the Fed would likely raise rates at this month’s meeting by a sizeable half-point.
That would have marked a re-acceleration in the Fed’s efforts to tighten credit. The central bank had raised its benchmark rate by a quarter-point in February, a half-point in December and by three-quarters of point four times before that.
The next day, testifying to a House committee, Powell cautioned that no final decision had been made about what the Fed would do at the March meeting. Still, on Friday, the government reported that employers added a robust 311,000 jobs last month. It was a potential sign of continued high inflation, and it led to predictions of a half-point hike at the Fed’s meeting next week.
Later that day, though, Silicon Valley Bank failed, thrusting an entirely new set of concerns onto the Fed.
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( With inputs from : www.politico.com )
New Delhi: Retail inflation in India remained above RBI’s 6 per cent upper tolerance band for the second straight month in February 2023, with the Consumer Price Index pegged at 6.44 per cent, government data released on Monday showed.
The retail inflation in rural and urban India was 6.72 per cent and 6.1 per cent, respectively. Among groups, cereals and products, and fruits, among others, contributed to the elevation in retail inflation in February.
Further, Consumer Food Price Index in February was 5.95 per cent, data showed.
Retail inflation on vegetables, however, declined 11.61 per cent.
Notably, India’s retail inflation, based on Consumer Price Index, during the month of December was at 5.72 per cent, versus 5.88 per cent in November and 6.77 per cent during October.
India’s retail inflation was above RBI’s 6 per cent target for three consecutive quarters and had managed to fall back to the RBI’s comfort zone only in November 2022.
Under the flexible inflation targeting framework, the RBI is deemed to have failed in managing price rises if the CPI-based inflation is outside the 2-6 per cent range for three quarters in a row.
Since May last year, the RBI has increased the short-term lending rate by 250 basis points, including the latest 25 bps hike, to tame inflation. Raising repo rate helps in cooling demand in the economy and thus helps in managing inflation.
Raising interest rates is a monetary policy instrument that typically helps suppress demand in the economy, thereby helping the inflation rate decline.
Meanwhile, average retail inflation in India is projected to be at 5.3 during the next financial year 2023-24, the Reserve Bank of India Governor Shaktikanta Das said last month while announcing monetary policy outcomes.
The projection, he had said, was based on the assumption of a normal monsoon.
The average inflation in Q1 2023-24 is expected at 5.0 per cent, Q2 at 5.4 per cent, Q3 at 5.4 per cent, and Q4 at 5.6 per cent, respectively.
For the current financial year 2022-23 ending March, inflation was projected at 6.5 per cent, with an average of 5.7 per cent in the January-March 2023 quarter.
Inflation is a general rise in the price level of an economy over a period of time (Representative Image)
New Delhi: Retail inflation dipped marginally to 6.44 per cent in February, mainly on account of a slight easing in prices of food and fuel items, as per government data released on Monday.
The inflation rate based on the Consumer Price Index (CPI) stood at 6.52 per cent in January and 6.07 per cent in February 2022.
The inflation rate for the food basket was 5.95 per cent in February, lower than 6 per cent in January.
Except for November and December 2022, retail inflation has remained above the RBI’s upper tolerance level of 6 per cent since January 2022.
The Reserve Bank has projected retail inflation at 6.5 per cent for 2022-23, with the January-December quarter at 5.7 per cent.
The central bank has been mandated by the government to ensure the retail inflation remains at 4 per cent with a margin of 2 per cent on either side.
To contain the rising prices, the RBI has hiked interest rates by 250 basis points since May last year. The latest rate hike of 25 basis points in February took the benchmark policy rate to 6.50 per cent.
Cairo: Egypt’s annual inflation nationwide reached 32.9 per cent in February 2023, the highest rate since the end of 2017, according to an official report.
The prices of food and beverage went up by 61.5 per cent, transportation, by 19.4 per cent, healthcare, by 16.8 per cent, and clothes and shoes, by 18.9 per cent, Xinhua news agency quoted the report issued by the Central Agency for Public Mobilization and Statistics, as saying.
Meanwhile, the prices of various commodities and services climbed by 24.7 per cent, it added.
The Egyptian pound has lost about half of its value since March 2022, when the Central Bank of Egypt started to order rounds of devaluations amid a shortage of foreign currency, particularly the U.S dollar, necessary for imports.
BRUSSELS — The European Parliament’s Socialists are warily eyeing their colleagues and assistants, wondering which putative ally might turn out to be a liar as new details emerge in a growing cash-for-favors scandal.
Long-simmering geographic divisions within the group, Parliament’s second largest, are fueling mistrust and discord. Members are at odds over how forcefully to defend their implicated colleagues. Others are nursing grievances over how the group’s leadership handled months of concerns about their lawmaker, Eva Kaili, who’s now detained pending trial.
Publicly, the group has shown remarkable solidarity during the so-called Qatargate scandal, which involves allegations that foreign countries bribed EU lawmakers. Socialists and Democrats (S&D) chief Iratxe García has mustered a unified response, producing an ambitious ethics reform proposal and launching an internal investigation without drawing an open challenge to her leadership. Yet as the Parliament’s center left ponders how to win back the public’s trust ahead of next year’s EU election, the trust among the members themselves is fraying.
“I feel betrayed by these people that are colleagues of our political group,” said Mohammed Chahim, a Dutch S&D MEP. “As far as I am concerned, we are all political victims, and I hope we can get the truth out in the open.”
S&D MEPs are grappling not only with a sense of personal betrayal but also a fear that the links to corruption could squash otherwise promising electoral prospects.
Social democrats were looking forward to running in 2024 on the bread-and-butter issues at the top of minds around the bloc amid persistent inflation, buoyed by Olaf Scholz’s rise in Germany and the Continent-wide popularity of Finland’s Sanna Marin. Now, the group’s appeal to voters’ pocketbooks could be overshadowed by suitcases filled with cash.
“We were completely unaware of what was going on,” said García, vowing that the group’s internal inquiry will figure out what went wrong. “We have to let the people responsible [for the investigation] work.”
The ‘darkest plenary’
Shock, anger and betrayal reverberated through the 145-strong caucus in early December last year when Belgian police began arresting senior S&D figures, chief among them a former Italian MEP Pier Antonio Panzeri and Eva Kaili, a rising star from Greece who had barely completed a year as one of Parliament’s 14 vice presidents.
“The Qatargate revelations came as a terrible shock to S&D staff and MEPs,” an S&D spokesperson said. “Many felt betrayed, their trust abused and broken. Anyone who has ever become a victim of criminals will understand it takes time to heal from such an experience.”
When the S&D gathered for a Parliament session in Strasbourg days after the first arrests, few members took it harder than the group’s president, García, who at one point broke down in tears, according to three people present.
“We are all not just political machines, but also human beings,” said German MEP Gabriele Bischoff, an S&D vice chair in her first term. “To adapt to such a crisis, and to deal with it, it’s not easy.”
“I mean, also, you trusted some of these people,” she said.
An Italian court ruled that the daughter of former MEP Pier Antonio Panzeri can be extradited to Belgium | European Union
In Strasbourg the group showed zero appetite to watch the judicial process play out, backing a move to remove Kaili from her vice presidency role. (She has, through a lawyer, consistently maintained her innocence.)
The group’s leadership also pressured MEPs who in any way were connected to the issues or people in the scandal to step back from legislative work, even if they faced no charges.
“It was of course the darkest plenary we’ve had,” said Andreas Schieder, an Austrian S&D MEP who holds a top role on the committee charged with battling foreign interference post Qatargate. “But we took the right decisions quickly.”
The S&D hierarchy swiftly suspended Kaili from the group in December and meted out the same treatment to two other MEPs who would later be drawn into the probe.
But now many S&D MEPs are asking themselves how it was possible that a cluster of people exerted such influence across the Socialist group, how Kaili rose so quickly to the vice presidency and how so much allegedly corrupt behavior went apparently unnoticed for years.
Like family
The deep interpersonal connections between those accused and the rest of the group were part of what made it all so searing for the S&D tribe.
Belgian authorities’ initial sweep nabbed not only Panzeri and Kaili but also Kaili’s partner, a longtime parliamentary assistant named Francesco Giorgi, who had spent years working for Panzeri. Suddenly every former Panzeri assistant still in Parliament was under suspicion. Panzeri later struck a plea deal, offering to dish on whom he claims to have bribed in exchange for a reduced sentence.
Maria Arena, who succeeded Panzeri as head of the Parliament’s human rights panel in 2019, also found herself under heavy scrutiny: Her friendship with her predecessor was so close that she’d been spotted as his plus-one at his assistant’s wedding. Alessandra Moretti, another S&D MEP, has also been linked to the probe, according to legal documents seen by POLITICO.
The appearance of Laura Ballarin, García’s Cabinet chief, raising a glass with Giorgi and vacationing on a Mediterranean sailboat with Kaili, offered a tabloid-friendly illustration of just how enmeshed the accused were with the group’s top brass.
“I was the first one to feel shocked, hurt and deeply betrayed when the news came out,” Ballarin told POLITICO. “Yet, evidently, my personal relations did never interfere with my professional role.”
Making matters worse, some three months later, the scandal has largely remained limited to the S&D. Two more of its members have been swallowed up since the initial round of arrests: Italy’s Andrea Cozzolino and Belgium’s Marc Tarabella — a well-liked figure known for handing out Christmas gifts to Parliament staff as part of a St. Nicholas act. Both were excluded, like Kaili, from the S&D group. They maintain their innocence.
Whiter than white
That’s putting pressure on García, who is seen in Brussels as an extension of the power of her close ally, Spanish Prime Minister Pedro Sánchez.
Spanish Prime Minister Pedro Sánchez is one of S&D chief Iratxe García most important allies | Ludovic Marin/AFP via Getty Images
However, she has not always been able to leverage that alliance in Brussels. A prime example is the backroom deal the political groups made to appoint the Parliament’s new secretary-general, Alessandro Chiocchetti, who hails from the center-right European People’s Party. García emerged mostly empty-handed from the negotiations, with the EPP maneuvering around her and The Left group securing an entirely new directorate general.
Kaili, from a tiny two-person Greek Socialist delegation, would also have never gotten the nod to become vice president in 2022 without García and the Spanish Socialists’ backing.
Yet when it comes to trying to clean house and reclaim the moral high ground, the Socialist chief has brought people together. “She deserves to be trusted to do this correctly,” said René Repasi, a German S&D lawmaker.
In the new year, the S&D successfully pushed through the affable, progressive Luxembourgish Marc Angel to replace Kaili, fending off efforts by other left-leaning and far-right groups to take one of the S&D’s seats in the Parliament’s rule-making bureau. In another move designed to steady the ship, the Socialists in February drafted Udo Bullmann, an experienced German MEP who previously led the S&D group, as a safe pair of hands to replace Arena on the human rights subcommittee.
And in a bid to go on the offensive, the Socialists published a 15-point ethics plan (one-upping the center-right Parliament president’s secret 14-point plan). It requires all S&D MEPs — and their assistants — to disclose their meetings online and pushes for whistleblower protections in the Parliament. Where legally possible, the group pledges to hold its own members to these standards — for example by banning MEPs from paid-for foreign trips — even if the rest of the body doesn’t go as far.
Those results were hard won, group officials recounted. With members from 26 EU countries, the group had to navigate cultural and geographic divisions on how to handle corruption, exposing north-south fault lines.
“To do an internal inquiry was not supported in the beginning by all, but we debated it,” said Bischoff, describing daily meetings that stretched all the way to Christmas Eve.
The idea of recruiting outside players to conduct an internal investigation was also controversial, she added. Yet in the end, the group announced in mid-January that former MEP Richard Corbett and Silvina Bacigalupo, a law professor and board member of Transparency International Spain, would lead a group-backed inquiry, which has now begun.
The moves appear to have staved off a challenge to García’s leadership, and so far, attacks from the Socialists’ main rival, the EPP, have been limited. But S&D MEPs say there’s still an air of unease, with some concerned the cleanup hasn’t gone deep enough — while others itch to defend the accused.
Some party activists quietly question if the response was too fast and furious.
Arena’s political future is in doubt, for example, even though she’s faced no criminal charges. Following mounting pressure about her ties to Panzeri, culminating with a POLITICO report on her undeclared travel to Qatar, Arena formally resigned from the human rights subcommittee. The group is not defending her, even as some activists mourn the downfall of someone they see as a sincere champion for human rights causes.
Vocal advocacy for Kaili has also fueled controversy: Italian S&D MEPs drew groans from colleagues when they hawked around a letter about the treatment of Kaili and her daughter, which only garnered 10 signatures.
“I do not believe it was necessary,” García said of the letter. “[If] I worry about the situation in jails, it has to be for everyone, not for a specific MEP.”
The letter also did nothing to warm relations between the S&D’s Spanish and Italian delegations, which have been frosty since before the scandal. The S&D spokesperson in a statement rejected the notion that there are tensions along geographical lines: “There’s no divide between North and South, nor East and West, and there’s no tension between the Italian and Spanish delegations.”
In another camp are MEPs who are looking somewhat suspiciously at their colleagues.
Repasi, the German S&D member, said he is weary of “colleagues that are seemingly lying into your face” — a specific reference to Tarabella, who vocally denied wrongdoing for weeks, only to have allegations surface that he took around €140,000 in bribes from Panzeri, the detained ex-lawmaker.
Repasi added: “It makes you more and more wonder if there is anyone else betting on the fact that he or she might not be caught.”
Jakob Hanke Vela, Karl Mathiesen and Aitor Hernández-Morales contributed reporting.
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( With inputs from : www.politico.eu )
Karachi: Pakistan’s annual inflation, measured by the Consumer Price Index (CPI), soared to a record high of 31.55 percent in February, compared to 27.6 percent in the previous month, driven by massive increases in food and transport prices, local media reported.
According to Arif Habib Corporation, this is the highest-ever CPI increase based on data available from July 1965, Dawn reported.
In February, 2022, inflation clocked in at 12.2 percent.
According to data released by the Pakistan Bureau of Statistics (PBS), inflation in urban and rural areas increased to 28.82 percent and 35.56 percent year-on-year respectively.
On a month-on-month basis, inflation rose 4.32 percent.
Consumer prices have risen sharply over the past several months, with annual inflation staying above 20 percent since June last year, Dawn reported.
In February, the increase in inflation was driven by a double-digit rise in all sub-indices except one.
The inflation figure is higher than the Ministry of Finance’s forecast of 30 percent.
The CPI-based inflation on a year-on-year basis will be 28-30pc in coming months, said the ministry in its monthly economic update & outlook for February, adding that the recent political and economic uncertainties were pushing up inflationary expectations.
The ministry expects inflation to remain high due to the uncertain political and economic environment, pass-through of currency depreciation, rise in energy prices and increase in administered prices in February, Dawn reported.
Although the State Bank of Pakistan has been enacting contractionary monetary policy, the inflationary expectation would take some time to settle. The Centre, in liaison with provincial governments, is closely monitoring the demand-supply gap of essential items and taking necessary measures to stabilise their prices, the report added.
Prices increased due to the rise in energy and food, but the Government rules out taking further measures for now
Prices marked their highest data in February since November 2022, with an inflation rate two tenths higher than in January, reaching 6.2%. According to the data released this Tuesday by the INE, it is due to the rise in electricity and food in February compared to the same month in 2022. In addition, underlying inflation -which does not take into account energy or fresh food- continued shooting up for another month, reaching 7.7%, its all-time record.
At the moment, the Government is not considering taking more measures than the VAT reductions on certain products that were adopted since January 1. Yesterday, the economic vice president Nadia Calviño assured during her visit to the Mobile World Congress in Barcelona that the fiscal measures would have her “journey” and that prices could not be expected to drop overnight.
In addition, he indicated that the European Central Bank (ECB) is the one who has the “European competence” in terms of inflation to take the necessary measures to appease this rate.
There are two consecutive months of rising inflation, which reached its maximum peak last July (10.8%) and from that moment began to drop until January, when it rose to 5.9% from 5.7% in December and in February it has risen another two tenths again.
The Executive continues to emphasize that Spanish inflation is the lowest in the European Union thanks to the measures adopted during these months. And in the general rate the data is true, the European average reached 8.6% in January compared to 5.9% in Spain. However, the underlying rate continues to exceed the European average by more than two points, which closed January -the latest data available- at 5.3%.
In monthly terms (February over January), the CPI registered an increase of 1%, its biggest monthly rise since last June, when it rose 1.9%.
#Inflation #reaches #February #months #rise
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( With inputs from : pledgetimes.com )
The effects of a weak currency can be seen in Swedes’ commercial invoices.
in Sweden the price of food has risen faster than in Finland and other northern neighboring countries. In January, food became more expensive in Sweden by almost 20 percent compared to a year ago, says the country’s statistics authority.
At the same time, the price of food in Finland and Denmark rose by about 15 percent. In Norway, food prices fell by an average of 12 percent from a year ago.
According to experts, there is an important reason for the rapid increase in food prices in Sweden.
“Weak Swedish krone. It gives an extra boost to food prices in Sweden compared to other countries,” says Nordea’s chief analyst Torbjörn Isaksson.
A large part of the food sold in Sweden is imported, and the weak krone makes imported goods more expensive than before. You can see it especially clearly with fruits and vegetables.
Still, according to Isaksson, the weak krone also increases the price of food produced in Sweden.
“Although the products are produced and sold in Sweden, the Swedish producer always has the opportunity to sell abroad if the price is better there. That’s why the weak krona also affects food produced in Sweden,” says Isaksson.
Also Economist at the Swedish National Institute of Economic Research Erik Glans believes that the krona is “probably the most important” explanation for differences in the rate of price increases.
Glans mentions that the Swedish krona weakened by about eight percent against the euro in 12 months. According to him, food prices can be expected to rise the more the exchange rate of the krona weakens.
Like the Swedish krona, the Norwegian krona is also weak, but the price of food in Norway has not yet risen rapidly. According to Isaksson of Nordea, it is difficult to make a comparison with Norway, because the food market in Norway is more regulated and “stricter” than in Sweden. According to him, Finland and Denmark are better points of comparison.
“The Swedish krona has weakened a lot against both the euro and the Danish krone,” says Isaksson.
LONDON — Joe Biden’s “protectionist” Inflation Reduction Act won’t help the U.S. counter the rise of China and could create a “single point of failure” in key supply chains, Britain’s trade chief Kemi Badenoch warned.
Speaking at a POLITICO event Tuesday night, Badenoch — recently promoted to head up the U.K.’s new Department for Business and Trade — predicted the flagship law would not achieve its key aims, and insisted the U.K. is not sitting on the sidelines in the transatlantic tussle over the plan.
The comments came just minutes after the U.S. ambassador to the U.K. mounted a spirited defense of the IRA at the same event.
The Inflation Reduction Act offers billions in subsidies and tax credits to try and incentivize take-up of electric vehicles and build up green infrastructure. But European and British carmakers are particularly concerned about the impact on their own industries of massive help for U.S. firms.
Speaking on Tuesday night, Badenoch said Britain — which has been lobbying against the plan but is not prepping its own subsidies — is “working very well with a group of like-minded countries who are worried about the Inflation Reduction Act.”
“The EU is very worried and we’re working jointly with them on it,” she said. “It’s not just the EU doing stuff and we’re not in the room. Japan is worried. South Korea is worried. Switzerland is worried.”
Many countries, Badenoch contended, are now “looking at what the U.S. is doing” with concern.
“It is onshoring in a way that could actually create problems with the supply chain for everybody else,” she said.
“And that will not have the impact that it wants to have when it’s looking at the economic challenge that China presents. So no, I don’t think it’s a good idea, not just because it’s protectionist. But it also creates a single point of failure in a different place, when actually what we want is diversification and strengthening of supply chains across the board.”
Speaking earlier Tuesday night, U.S. Ambassador to the U.K. Jane Hartley argued that the plan could have major positive implications for countries beyond the U.S.
“One of the things I would say is there’s going to be a huge amount of money, R&D — the technology is going to improve, the technology is going to be cheaper,” she said. “The technology is going to be used by everyone in the world — not just the U.S.”
Hartley stressed that U.S. Treasury Secretary Janet Yellen is “looking pretty hard” at the act during its so-called comment period, when U.S. agencies take feedback on a plan. Both President Biden and U.S. Trade Secretary Katherine Tai had, she said, stressed that their country “didn’t do this to hurt our allies — we want to protect our allies.”
CORRECTION: A previous version of this article misstated Janet Yellen’s job title. She is the treasury secretary.
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( With inputs from : www.politico.eu )
Islamabad: The Pakistan government under Prime Minister Shehbaz Sharif dropped another bomb of inflation on the masses on Thursday as it jacked up petrol price by Rs 22.20 per litre and increasing gas price by at least 124 per cent, plunging the already inflation-hit people into further stress and struggle.
As per the latest notification issued by the government effective from Thursday, the prices of petroleum products were revised as follows:
MS (petrol) revised to Rs 272.00 a litre, high-speed Diesel (HSD) price revised to 280.00 litre, kerosene oil (SKO) price revised from Rs 189.93 to Rs 202.73 and light diesel oil revised from Rs 187.00 to Rs 196.68, all effective from Thursday.
The decision came weeks after the government increased prices of petroleum products by Rs 35, a decision undertaken two days before the scheduled revision of prices.
Sources in the Finance Ministry said that the decision has been taken to manage the depreciation of Pakistani rupee against the US dollar, since an artificial cap on the local currency was removed and the rupee value was allowed to decide its value as per the market-based currency exchange rate.
Moreover, the government has also jacked up sale prices of gas on the advice of the Oil and Gas Regulatory Authority (OGRA), increasing the gas sale price from 16.6 per cent to at least 124 per cent for categories of consumers of the Sui Northern Gas Pipelines Limited (SNGPL) and the Sui Southern Gas Company (SSGC).
To add more to the misery of the locals, the revised prices of gas have been put to effect from January 1, 2023, leaving the masses shell-shocked and clueless as to how the latest inflation bomb will further damage their lives.
The Pakistan government is forced to take these decisions as it continues to engage with the International Monetary Fund (IMF) in a desperate effort to get its ninth review of the IMF EFF (Extended Funding Facility) approved and release of $1.1 billion, for which IMF has demanded implementation of tough pre-conditions if Islamabad wants to revive the IMF programme.
Pakistan is currently at the lowest level in terms of its foreign exchange reserves, which stand at just over $2 billion, enough to meet only three weeks of imports.
Finance Minister Ishaq Dar had earlier expressed his anger at the IMF for not approving Pakistan’s ninth review and had stated that if the IMF team does not visit Pakistan, he doesn’t not care, adding that Pakistan would handle the situation from elsewhere.
However, with all other countries, including China, linking their financial support to Pakistan with the revival of the IMF programme, Pakistan is left with no other option but to nod to all the tough demands of the IMF, which include multi-decade high inflation of at least 27 per cent and rising.
As virtual talks with the IMF team continue, Pakistan government has also laid a supplementary finance bill aka ‘mini-budget’ before the Parliament for debate and approval, proposing to raise the goods and services taxes (GST) from 17 per cent to 18 per cent, which Dar said would help raise at least Rs 170 billion in extra revenues during the current fiscal year ending July.
The finance bill also proposes increase in taxes on luxury items to at least 25 per cent. Moreover, it also proposes price hike for air travel, cigarettes and sugary drinks etc., which has been widely questioned and criticised by the coalition partners of the government and the opposition benches.
But analysts say that Pakistan has no other option but to accept all the demands of the IMF and revive the funding programme to save the country from bankruptcy, which under the current situation seems eminent.
