Media watch: Discount rate hike, RGST and need for reforms

SBP raises interest rate to 13.5% while the debate on the reformed GST move towards its conclusion.

Media watch is a daily round-up of key articles featured on news websites, hand-picked by The Express Tribune web staff.

Policy rate hike: a straight forward approach

No doubt, the SBP policy rate hike will greatly disappoint the business community. But what SBP is clearly signalling to the nation is to pressurise the government to curtail its borrowing and retire its debt by selling assets it holds in the form of public sector entities notoriously known as white elephant. And, at the same time get out of commodity sector to stop the haemorrhage of the federal budget. (brecorder.com)

CPI may fall more than 13.5% in FY11: SBP

Slowdown in private demand later in the year will at best have a moderating effect on CPI inflation, as it is likely to be neutralised by an expected increase in government spending in general and on reconstruction in the flood-affected areas in particular.  (dailytimes.com.pk)

State Bank raises discount rate by 50bps to 13.5pc

The central bank stressed that despite uncertainty after the floods, the government should focus on implementation of tax reforms to enhance the much-needed revenues, resolution of the energy sector subsidies and circular debt to restore economic growth, relief measures for those affected by the floods and containment of government borrowing from the State Bank to check inflation. (thenews.com.pk)

Reformed GST

The idea behind RGST is simple enough: it is a value-added tax that will be imposed on each stage of production. If the zero-rating on the textile industry goes, as promised, the new regime will look something like this: ginners who sell Rs100 of cotton to spinners will add Rs17 (or whatever the rate of RGST) to the selling price; next, spinners who ‘add value’ to the Rs100 of cotton by turning it into yarn, say they double its value to Rs200, will sell the yarn to cloth-makers for Rs234, but will be eligible to reclaim the Rs17 tax paid earlier; and so on up the production chain. (dawn.com)

Economy needs reformation

He (Dr Waqar Ahmed) said that the investment rate in Pakistan was about 18 percent against India which has 40 percent. There was a need to increase Pakistan competitiveness rate, which at current stand for 101 out of total 119 numbers.  (nation.com.pk)