Pakistan’s economy showed signs of improvement in August as the consumer price index (CPI) rose by 9.6% year-on-year, marking a 34-month low. This positive development follows a period of high inflation, with the CPI reaching 27.4% in August 2023. The data, released by the country’s Bureau of Statistics (PBS), highlights the impact of recent government measures aimed at stabilizing the economy.
The government’s efforts include a combination of tax adjustments and exemptions in specific sectors, implemented in June to meet the International Monetary Fund’s (IMF) criteria for a bailout package. These measures aimed to generate additional revenue and alleviate the country’s financial burden. Notable changes include a capital value tax on property in Islamabad, new tax measures on builders and developers, and a revised Petroleum Development Levy (PDL) on diesel and petrol. Despite opposition, exporters will now be subject to the standard corporate tax rate of 29%, a significant shift from the previous 1% tax on export turnover.
The government’s efforts to address the economic crisis are reflected in the recent passage of a tax-heavy finance bill, which was approved amidst ongoing negotiations for a new IMF bailout package. These measures, while challenging, are seen as crucial steps towards economic recovery and stability. The reduction in inflation, coupled with these government initiatives, offers a glimmer of hope for Pakistan’s economic outlook. The country’s journey towards financial stability, however, remains a challenging and complex process.
