EUR 81.30 For Business Accounts Only

Pakistan Budget FY19 - Ambitious Budget Ahead of The Elections

• PML-N Govt. proudly unveiled its 6th budget yesterday with total outlay of Rs5.9tn (+11% YoY over revised estimate of Rs5.3tn) for FY19. We are of the view that FY19 Federal budget seems highly populist with a series of relief measures, which will likely bode well for the stock market in the short run.
• The Govt. announced major tax relief for salaried class in-line with the recently announced tax relief package, exempting income tax to individuals with annual salary of up to Rs1.2mn. The Govt. also announced that corporate tax rate to be gradually reduced by 1% to 25% (from 30%) during the next 5 years, which would result in reduced corporate tax rate of 29% for FY19 from 30%.
• The Govt. also reiterated its stance on Amnesty Scheme as undeclared asset can be regularized till Jun 30, 2018. In a big policy change, state is also given the power to purchase land & property at 100% of the declared value within six-months of its registration. Other contours of the Amnesty Scheme including regularization of domestic and foreign assets have also been made part of the finance bill. Regularization of unaccounted for wealth will be positive for stock market.
• Other key highlights of the budget include: 1) super tax to be reduced by 1% every year (currently it is 3% for non-banking companies & 4% for banks), 2) removal of tax on bonus shares and 3) reduction of GST on all Fertilizer products among others.
• Sector wise Consumer, Textile and Fertilizer are expected beneficiaries of budgetary measures.