Wednesday, July 16 2025

Aurangzeb, traders begin talks to ease tensions
In a bid to preempt countrywide unrest, Finance Minister Muhammad Aurangzeb on Tuesday constituted a high-level committee to hold consultations with traders on budgetary measures aimed at documenting the economy. The multi-stakeholder committee will conduct a 30-day consultation process to develop a consensual and actionable proposal, which will be submitted to Prime Minister Shehbaz Sharif and the federal cabinet. According to sources present at the meeting, officials from various ministries clarified that the new tax amendments are primarily intended to curb large-scale sales tax fraud. The committee will only consider trader concerns that are deemed genuine and substantiated, the officials added.
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Moody’s urged to improve Pakistan’s credit rating
Finance Minister Muhammad Aurangzeb on Tuesday urged the leading US rating agency — Moody’s — to improve Pakistan’s credit rating and help its return to international capital markets at favourable conditions. Pakistan has been postponing the launch of international bonds since July 2021 due to challenging macroeconomic conditions and resultant poor credit rating and relying mostly on time deposits from friendly nations to meet external liabilities and stay afloat. Moody’s had upgraded Paki­stan’s credit rating by one notch to Caa2 from Caa3 (downgraded in February 2023 due to suspension of the IMF programme) and changed its outlook to positive from stable for improving macroeconomic conditions, including liquidity and external position from very weak levels.
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ADR drops to 38pc after tax condition withdrawn
Pakistan’s banking sector has reverted to its traditional model as the advance-to-deposit ratio (ADR) dropped to 38.1pc in June 2025, down from 50pc in December 2024, reflecting a significant slowdown in lending activity. The surge in lending last year was driven by a government policy announced in the FY25 budget, which imposed an incremental tax of up to 15pc on banks that failed to maintain a minimum ADR of 50pc. The move was aimed at encouraging private sector credit and boosting economic growth, which had remained below desired levels. The policy triggered an aggressive response from banks. Some major institutions reportedly advised large depositors to withdraw funds or face penalties as banks scrambled to meet the new threshold. In a bid to comply, banks significantly increased lending to Non-Banking Financial Institutions (NBFIs), with loans reaching a record Rs1tr by December 2024 — 130pc higher than the total credit stock of NBFIs at the time.
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Govt-mills talks on sugar retail rate inconclusive
Talks between the Pakistan Sugar Mills Association (PSMA) and Minister for National Food Security and Research Rana Tanveer Hussain on Tuesday ended without a clear decision on the retail price of sugar, as market rates remain elevated. Sources familiar with the meeting said a final decision on the retail price is expected in the next few days. However, it was emphasised during the meeting that the price should remain close to Rs 170 per kg. The PSMA chairman assured that sugar prices would decline within a day or two. While the government claimed the PSMA has agreed to supply sugar at an ex-mill price of Rs165 per kg, the actual retail price for consumers remains unannounced. Observers noted that Monday’s agreement yielded substantial profit margins for mills, leaving consumers to bear the brunt of high retail rates.
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LSM expands 2.29pc in May
The Large-Scale Manufacturing (LSM) sector posted a modest growth of 2.29 per cent in May compared to the same month last year, according to data released by the Pakistan Bureau of Statistics on Tuesday. This marks the third consecutive month of positive growth, attributed largely to a significant cut in the key interest rate to 11pc. The LSM sector showed positive growth from December 2023 to May 2024 but slipped back into negative territory in June 2024. On a year-on-year basis, LSM declined by 2.65pc in August, followed by a 1.92pc drop in September. It registered a marginal growth of 0.02pc in October before contracting again by 3.81pc in November, 3.73pc in December, 1.21pc in January and 3.51pc in February. A slight recovery was noted in March, with production increasing by 1.79pc.
Related news categories: business economic-indicators misc