Govt to bring back money stashed in Swiss banks

It is assumed that Pakistani nationals have over $200 billion stashed in Swiss banks. PHOTO: FILE

ISLAMABAD: 

The government has said that it will hold talks with Switzerland over a new tax treaty in order to recover $200 billion stowed illegally in the central European country’s secretive banking system.

The government is seriously working to seek help through the new Swiss laws… to exchange heretofore confidential information about ill-gotten monies stashed behind the secrecy wall of Switzerland’s banking system, Finance Minister Ishaq Dar told the National Assembly in a written reply on Friday.

Under the new law, known as The Restitution of Illicit Asset Act 2010 (RIAA), the Swiss government allows the exchange of confidential information about the money deposited in its banks.

The finance minister added that amending or renegotiating the existing Pak-Swiss Tax Treaty — a process which has already been initiated — will be a key step in reaping the benefits of the new Swiss laws.

Ishaq Dar said that a summary was placed before the federal cabinet seeking its approval to re-negotiate the existing (deficient) Pakistan-Switzerland Tax Treaty, which was approved in September 2013.

According to the procedure, the Federal Board of Revenue (FBR) had taken up the matter with the Ministry of Foreign Affairs to approach the Swiss government, expressing Pakistan’s desire to renegotiate the existing tax treaty and seek a suitable set of dates and choice of venue to start the process.

Subsequently, the minister revealed that the Swiss authorities have expressed willingness to renegotiate the current Pak-Swiss agreement and the two sides will meet on August 26 to discuss the revised agreement.

According to the finance ministry, Pakistan’s DTA with Switzerland, signed in 2005 and enforced in 2008, does include Article 26, which creates an obligation to exchange information relevant to the correct application of tax treaties.

But in the case of this DTA it is deficient and does not enable either country to exchange meaningful tax information about their respective taxpayers.

It is assumed that Pakistani nationals have over $200 billion stashed in Swiss banks. One of the directors of Credit Suisse AG Bank has stated on record that $97 billion of worth of Pakistani capital is deposited in his bank.

Similarly, Micheline Calmy-Rey, the then Swiss foreign minister, is reported to have put the figure of Pakistani money hidden in Switzerland at $200 billion — a statement that has not been contradicted.

In view of this matter, Pakistan may be a net creditor to the rest of the world in the sense that external assets, measured by the stock capital flight, far exceed external liabilities, as measured by the stock external debt.

However, the ministry of finance admits that the difference is that the liability belongs to the state and the assets belong to the non-compliant citizens and the situation needs immediate corrective action and reversal.

Investment: Citibank, SCB show interest in Pakistan

SBC delegation also expressed enthusiasm to participate in the financing of the Neelum Jhelum project. DESIGN: CREATIVE COMMON

ISLAMABAD: 

Chief Executive Officers (CEOs) of Citibank and Standard Chartered Bank have expressed their willingness to finance power projects in Pakistan. This was conveyed to Finance Minister Ishaq Dar during separate meetings in Dubai.  

Citibank CEO Atiqur Rehman and Standard Chartered Bank CEO Christos Papadopoulos observed that there was a visible shift in the attitudes of Middle Eastern Banks, which were taking keen interest in Pakistan after the successful launch of the Eurobond.

According to the CEOs, Pakistan can fetch lucrative prices on financing transactions and they showed interest in participating in the Islamic structuring  of the financial sector of the country.

There can be multiple transactions which can take place over a period, they added. SBC delegation also expressed enthusiasm to participate in the financing of the Neelum Jhelum project and other infrastructure projects

Pakistan unit: HSBC to sell business to Meezan Bank

Meezan Bank, a premier Islamic bank, posted 13% growth in after-tax profit that increased to Rs1.106 billion in the quarter ended March 2014 compared to Rs982 million earned in the corresponding quarter last year.

ABU DHABI: 

HSBC said it has agreed to sell its banking business in Pakistan to Meezan Bank Limited, seven months after failing to win regulatory approval to sell it to another company.

The Pakistan unit has 10 branches and had assets of about $455 million at the end of 2013, HSBC said. It did not put a price on the deal and said it was subject to regulatory approval. It is expected to complete in the second half of 2014.

The sale continues a retreat by HSBC from countries where it lacks scale. Europe’s biggest bank has closed or sold more than 60 businesses in the last three years in an effort to cut costs and complexity.

Meezan Bank, a premier Islamic bank, posted 13% growth in after-tax profit that increased to Rs1.106 billion in the quarter ended March 2014 compared to Rs982 million earned in the corresponding quarter last year. Its deposits grew to Rs307 billion at the end of March against Rs290 billion on December 31, 2013, a growth of 6%.

Trade: Pakistan aiming to Polish bilateral relations

“The Polish companies have shown great interest to invest in Pakistan,” says federal minister for commerce last month Khurram Dastagir Khan. PHOTO: PID/FILE

ISLAMABAD: 

In a bid to bolster the country’s economy, Minister for Commerce Engineer Khurram Dastgir has invited Polish businessmen to invest in different sectors of Pakistan, while stressing the need to adopt a comprehensive approach to deepen bilateral relations.

Poland, with its robust economic fundamentals, holds great promise for emerging democracies in the world.

“The Polish companies have shown great interest to invest in Pakistan,” informed Dastgir after his meeting with the Polish Deputy Minister for Foreign Affairs Katarzyna Kacperczyk.

He said a comprehensive Memorandum of Understanding (MoU) needs to be signed between Poland and Pakistan that will encompass all potential areas for cooperation, according to a statement received here on Friday.

Kacperczyk agreed to work with the Polish Ministry of Finance to design a package for companies that are interested to work in Pakistan.

Dastgir also met with the top management of leading Polish companies in coal mining, textile, chemical and rail and rolling stock manufacturing sectors and invited them to invest in Pakistan.

He assured them that the Pakistan government was ready to extend its support.

Earlier, the minister opened the first Pakistan-Central Europe Economic Cooperation Forum in Katowice, a major industrial city located in south Poland.

While addressing the European audience, he affirmed that Pakistan attaches great importance to its relations with Poland and the European Union (EU).

EU, being a huge trading partner of Pakistan, has a very important place in the country’s economic agenda.

IMF review: Progress in stabilising economy, but more needs to be done

Finance Minister Ishaq Dar (R) and IMF's Jeffery Franks addressing the press conference on Saturday. PHOTO: APP

ISLAMABAD: Pakistan and International Monetary Fund on Saturday announced an agreement on next year’s budget framework that envisages fiscal consolidations of Rs290 billion that will be achieved by levying Rs220 billion new taxes and reducing power subsidies, even as the financial body noted that the economy was largely on track at the end of the third review.

“For next year we have agreed to reduce fiscal deficit to 4.8% of Gross Domestic Product from this year’s deficit of 5.8% of the GDP”, said Jeffery Franks, the IMF’s Mission Chief to Pakistan while addressing a press conference along with Finance Minister Ishaq Dar. To bridge the deficit the government will borrow Rs1.4 trillion from domestic and international markets.

A further reduction of 1% of GDP (Rs292 billion) in budget deficit –gap between national income and expenditures, indicates the IMF’s preference for economic stabilisation over economic growth, according to independent economists. It will be the second year of fiscal stabilisation after steep adjustments equal to 2.2% of the GDP were implemented in the outgoing fiscal year.

“The mission and the authorities agreed on the key revenue and expenditure measures to achieve a further reduction in the fiscal deficit in fiscal year 2014-15”, said Franks. The agreement came just weeks before the federal government is going to present its second budget in the Parliament.

“Pakistan has made progress in stabilising the economy but yet more needs to be done”, said Franks while saying that the IMF has increased its growth forecast for Pakistan to 3.3% from 3.1%, which is still lower than official target of over 4%.

Franks said reduction in budget deficit will be achieved by reducing power subsidies and increasing tax base by eliminating Statutory Regulatory Orders (SRO), coupled with other revenue measures. He, however, said next year’s budget will provide room for additional development spending. He said besides closing tax loopholes, the FBR must step up its efforts and improve enforcement to enhance revenues.

Franks said to lessen the impact of these measures on poor, both the IMF and Pakistan have agreed to increase monthly stipend under Benazir Income Support Programme in the new budget. The BISP beneficiaries get Rs1,200 per month stipend. Ishaq Dar said that BISP stipend will be increased equal to the raise given to the government employees, expected to be 10% for next year.

Dar said that the first phase of withdrawing tax exemptions will be implemented through Finance Bill 2014. He said import duties will also be lowered in three years, beginning from new financial year. On increase in power tariffs issue, he said the consumers of up to 200 units will be exempted from any further increase in tariffs. Dar clarified that reduction in power subsidies will also be achieved by reducing line losses and improving recovery. He said the government will not clear the circular debt, as the debt was piling up again due to less electricity bills recoveries. Dar said so far Rs232 billion power subsidies have been given.

Outgoing fiscal year

Dar and Franks announced successful completion of the third review of the $6.7 billion programme, paving way for the IMF’s Executive Board to consider approval of $550 million next loan tranche by next month.

The finance minister said during the current fiscal year the net IMF’s disbursement remained negative by $1 billion, as Islamabad will receive $2.2 billion fresh loans including upcoming tranche while it returned $3.2 billion.

Franks said the FBR’s revenue collection in this fiscal year will remain below the IMF projections. He said the government recognized an emerging revenue shortfall in April tax collection and committed to taking the necessary compensatory actions to assure attainment of the end-year deficit target.

Dar admitted that the FBR’s collection target has been downward revised to around Rs2.275 trillion. He said Rs70 billion further reduction in tax target was because of less collection of duties at import stage due to strengthening rupee. The Parliament had approved Rs2.475 trillion target, which was lowered down to Rs2.345 trillion in September last year.

Dar said despite lowering tax target, the government will achieve 5.8% of GDP budget deficit target by “better expenditure management” –a veiled reference to slashing development budget.

Franks said economic indicators were generally improving, with growth gaining momentum, external finance improving, and credit to the private sector rising. Franks said Pakistan’s programme was broadly on track and it met all end-March 2014 performance criteria with the exception of the target on Net Domestic Assets of the central bank, which was missed by a small margin.

However, the IMF remained concerned about increase in inflation rate. “The IMF mission urged the SBP to remain vigilant on recent inflationary pressures in their monetary policy decisions, while continuing their ambitious program to rebuild reserves”, said Franks. Inflation, which remained in single digits, stood at 9.2%

Iniesta: Martino is best option for Barcelona

The attacking midfielder has stood by the Camp Nou coach amid speculation that he will be replaced in the summer and says the team have "failed" at key times in 2013-14

Andres Iniesta believes that Gerardo Martino is the best option for Barcelona right now, despite speculation that he will leave in the summer.

Celta coach Luis Enrique is reported to lead a list of potential replacements for the Argentine, who only took over from the late Tito Vilanova last summer.

A campaign which saw the Catalans exit the Champions League at the quarter-final stage, lose to Real Madrid in the Copa del Rey final and fail to dominate in La Liga have seen Martino under heavy scrutiny, but Iniesta leapt to the defence of his trainer.

"For me, the coach that we have now is the best," Iniesta said to Diario Ole. "Also, I would be delighted if he stayed here for longer and showed everyone what he can do.

"The first year is a difficult one for everyone. I have always seen him with the desire and determination needed. He always believes in our chances.

“Things don’t always go how you want them to, but you have to try. The world of Barcelona is always difficult, not just for him, but for everyone and for us players as well. There is a constant high demand and you have to be ready for it.

"We have failed as a team at important moments. Sometimes things don’t go how you want them to.

"This isn’t because you don’t want it, it’s just how it goes sometimes. You always need to be making changes, regardless of whether you are winning trophies or not."

Barca visit Elche on Sunday aware that a win would mean that they host fellow title contenders Atletico Madrid on the final day of the season knowing that victory would see them defend the title on head-to-head record.

Mourinho never explained why I was dropped at Chelsea, says Mata

The Spaniard made just 13 Premier League appearances before his move to Old Trafford but says that he never questioned the 51-year-old's selection policy at Stamford Bridge

Manchester United star Juan Mata has revealed that he was never told the reasons why he was dropped atChelsea by Jose Mourinho.

Following the 51-year-old's return to Stamford Bridge last summer, the Spaniard struggled to secure regular first-team football and made just 13 Premier League appearances before his switch to Old Trafford at the end of January.

Mata was named as Chelsea's player of the year for two consecutive seasons before Mourinho's arrival and the midfielder says that he did not ask why he was frozen out.

"No. We never talked about that. Nor would we," Mata told The Guardian. 

"When I played, I played. He would give me instructions. 

"There are coaches who explain but others who don't think it's necessary. That's all."

Mata maintains that he still keeps in touch with his former team-mates at Chelsea but concedes that the build-up to his move to Old Trafford was difficult to cope with.

"Mentally, it was complicated. It was hard to leave Chelsea and I'll always be grateful but, at the same time, I was joining a great club,” said the midfielder.

"I spent virtually the whole time at home with my family, trying to stay calm, waiting, watching time pass, watching films and series, checking the phone. I went to the gym to make sure I didn't lose shape because I hardly trained [with Chelsea].

"Lots of team-mates are friends and they call. Not to gossip but to ask how you are, to be by your side. I'm still in touch with people at Chelsea; there are good people in that dressing room, friends forever. 

"Everything depends on the club more than the player: the quantities, the paperwork."