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Budget deficit to balloon to Rs5.6tr in FY22, says Miftah as he slams PTI’s economic policies

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Pakistan Muslim League-Nawaz (PML-N) leader Miftah Ismail, also a former finance minister, on Tuesday informed Pakistan’s budget deficit will hit Rs5,600 billion at the end of the ongoing fiscal year, a record high level, as he slammed economic policies of the ousted government of Pakistan Tehreek-e-Insaf (PTI).

Addressing a press conference at his residence, Miftah – a key member of the PML-N whose president, Shehbaz Sharif, was elected the country’s prime minister on Monday after the ouster of Imran Khan – said the previous government informed us that the country would face a deficit of around Rs4,000 billion.

“However, this deficit will balloon to Rs5,600 billion, which is by far the highest deficit in Pakistan’s history,” said Miftah, who served as finance minister during 2018.

“If we add the Rs800 billion in supplementary grants, the deficit ends up at Rs6,400 billion,” he said, adding that out of Rs800 billion, Rs220 billion alone needs to be given to Sui Northern Gas Pipelines Limited (SNGPL) while another Rs80 billion needs to be disbursed to Gencos to keep them afloat.

Tackling economic issues is one of the main, and most urgent, responsibility of the incoming government, as the South Asian country’s economy faces a number of issues on multiple fronts including a rising inflation rate and depleting foreign exchange reserves.

Terming the Rs373-billion relief package announced by then Prime Minister Imran Khan as a “landmine left for the newly formed government of Shehbaz Sharif”, Miftah said that PTI officials wrongly said that the package could be financed by the government.

“The International Monetary Fund (IMF) has not agreed on the said package, and we would have to renew negotiations with the international lender,” said Miftah.

Rejecting claims, Miftah said that the previous government never achieved a primary surplus.

The PML-N leader added that Pakistan’s trade deficit is expected to hit $45 billion this fiscal year, which is a record.

“Pakistan imports are going to hit a record $75 billion, whereas the country’s exports will reach $30 billion,” he said.

Miftah said that due to the rising current account deficit, foreign exchange reserves are declining. “Last month alone, forex reserves declined by $5 billion, which is the largest single decrease in foreign exchange reserves in the history of Pakistan,” said Miftah.

“Our government’s top priority is to stabilise and increase the foreign exchange reserves,” he said.

Miftah said that in the coming fiscal year Pakistan needs to make payments of $30 billion, for which it is important to take the IMF on board.

Praising announcements made by Prime Minister Shehbaz, Miftah had earlier said that his government increased the pension of pensioners by 10% immediately, and also raised the minimum wage to Rs25,000.

Miftah added that markets reacted positively to Shehbaz Sharif’s ascent to the PM House, as the Pakistan Stock Exchange (PSX) posted massive gains, whereas the dollar, which was trading at 190 just days ago, has gone down to 182 against the rupee.

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Unveiling Financial Secrets: The Power of Monitoring Your Tax Code for Maximum Wealth Growth

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Introduction

In the realm of personal finance, one often overlooked yet crucial aspect is ensuring that your tax affairs are in order. Finance expert Laura Pomfret emphasizes the significance of regularly checking your tax code to avoid potential financial discrepancies. In this article, we delve into why it is essential to stay informed about your tax code, the implications of being on the wrong code, and practical tips to maximize your earnings before the tax year-end deadline on 5th April.

Why Checking Your Tax Code Matters

Understanding the Basics:
Your tax code is a unique combination of numbers and letters used by employers and pension providers to calculate how much income tax should be deducted from your pay or pension. It determines your personal allowance and any additional factors that affect your tax liability.

Detecting Errors and Overpayments:
Errors in your tax code can lead to overpayments or underpayments of tax. Being on the wrong tax code can result in you paying more tax than necessary, leading to financial losses. Regularly reviewing your tax code can help identify any discrepancies and rectify them promptly.

The Impact of an Incorrect Tax Code

Financial Losses:
Being on an incorrect tax code can result in overpaying or underpaying taxes, impacting your disposable income. Overpaying taxes means you are losing money that could have been utilized elsewhere, while underpaying can lead to unexpected bills and penalties.

Legal Implications:
Failure to rectify errors in your tax code can have legal consequences. HM Revenue & Customs (HMRC) may impose fines or interest charges for underpayment of taxes due to incorrect coding. Staying proactive in monitoring your tax affairs can prevent such issues.

Maximizing Your Earnings Before the Deadline

Best Time to Contact HMRC:
Laura Pomfret suggests calling HMRC early in the morning or late in the afternoon for quicker assistance with any tax code-related queries. Avoid peak times when call volumes are high to receive more efficient support.

Utilizing Tax-Efficient Strategies:
Before the end of the tax year on 5th April, consider utilizing tax-efficient strategies such as maximizing contributions to pensions or ISAs, claiming eligible expenses, and reviewing investment portfolios for potential gains.

Conclusion

In conclusion, checking your tax code is a fundamental aspect of managing your finances effectively. By staying vigilant and proactive in monitoring your tax affairs, you can avoid financial losses, and legal implications, and maximize your earnings within the current tax year. Take control of your financial well-being by regularly reviewing your tax code and seeking guidance from experts like Laura Pomfret to ensure you are making the most out of your money.

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10 ways to make your Small Business Recession-proof

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In today’s volatile economic climate, it’s crucial for small businesses to be prepared for any potential downturns or recessions. The key to surviving and thriving during challenging times lies in implementing effective strategies that can recession-proof your business. By taking proactive measures and adopting smart, adaptable approaches, you can not only weather the storm but also position your small business for long-term success.

In this article, we will explore ten proven strategies that can help your small business navigate through a recession and emerge stronger on the other side. So let’s dive in and discover how you can recession-proof your business and safeguard its future.

  1. Diversify your products or services: Consider expanding your offerings to appeal to a wider audience or to cater to changing market demands. This can help you stay resilient during economic downturns.
  2. Focus on customer retention: Cultivate strong relationships with your existing customers by providing exceptional service and personalized experiences. Loyal customers are more likely to stick with you even in tough times, boosting your sales and revenue.
  3. Embrace innovation and technology: Stay ahead of the curve by embracing new technologies and innovative solutions that can streamline your operations, boost efficiency, and differentiate your business from competitors.
  4. Build a robust online presence: In today’s digital world, having a strong online presence is vital. Invest in a user-friendly website, optimize it for search engines, and engage with your audience through social media platforms to increase brand visibility and attract new customers.
  5. Develop a contingency plan: Prepare for unforeseen circumstances by creating a contingency plan that outlines steps to be taken in the event of a recession or economic slowdown. This will help you react swiftly and make informed decisions to protect your business.
  6. Monitor and manage your finances: Stay on top of your financials by regularly reviewing your budget, cutting unnecessary expenses, and optimizing cash flow. Consider working with a financial advisor to gain insights and ensure your business remains financially stable.
  7. Foster a strong company culture: Nurture a positive work environment that motivates and retains talented employees. A united and passionate team can help navigate difficult times and find innovative solutions to challenges.
  8. Explore new markets: Look for opportunities to expand your customer base by exploring new markets or geographical areas. Conduct market research to identify niche markets or untapped segments that align with your business offerings.
  9. Collaborate with other businesses: Seek mutually beneficial partnerships with complementary businesses in your industry. By pooling resources and expertise, you can create innovative solutions, share marketing efforts, and expand your customer reach.
  10. Stay informed and adapt quickly: Keep a close eye on market trends, industry news, and economic indicators. By staying informed, you can anticipate changes, proactively adapt your business strategies, and seize new opportunities that arise during challenging times.

Conclusion

In order to recession-proof your small business, it is important to diversify your product offerings, build strong customer relationships, practice effective financial management, embrace technology and innovation, and foster a positive company culture. By implementing these strategies, you can create a stable foundation and position your business for long-term success.

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The Impact of the Russia-Ukraine Conflict on Global Financial Markets

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Since the outbreak of the Russia-Ukraine war, the global capital markets had experienced the initial plunge on February 24, and then stabilized and rebounded in the second trading day on February 25. The three major U.S. stock indexes closed up collectively, with the Dow Jones industrial average, the S&P 500, and the Nasdaq up 2.51%, 2.24%, and 1.64% respectively.

European stocks also rallied, with Russia’s RTS index up 26.12% after tumbling more than 50% during the previous session, while the UK’s FTSE 100, France’s CAC 40, and Germany’s DAX all rose more than 3%. The prices of gold, crude oil, and other safe-haven commodities all fell sharply and gave up their sharp gains from the first trading day. Taken as a whole, this implies that the impact of the Russia-Ukraine conflict on global capital markets is relatively limited for now.

Judging from the reflection of the capital market, the initial impact of the Russia-Ukraine crisis on the financial market was not too drastic. This may have something to do with the intensity of the war, as well as the influence of the countries involved in the capital markets. If the war is limited in scale, it will not cause a systemic crisis like the COVID-19 pandemic.

However, in terms of its long-term development, researchers at ANBOUND believe that the evolution of geopolitical conflict patterns brought about by the Russia-Ukraine crisis will inevitably affect global investment decisions and capital flows. These effects will be gradual and profound, indicating that global financial markets will evolve with geopolitical changes.

Russia, which started the war, will be hit hardest. On the one hand, the war itself, as an escalation of the Russia-Ukraine crisis, will not end soon. On the other hand, even if Russia wins an overwhelming military victory, there will still be a long period of instability in Ukraine, a situation that investors would not want to see. Moreover, as the crisis escalated, both the United States and the European Union have imposed economic and financial sanctions against Russia.

The latest information shows that Europe and the U.S. have decided to exclude some Russian financial institutions from the SWIFT system. SWIFT sanctions will have a significant negative impact on Russia’s economy, foreign trade, and various financial transactions. The U.S. and Europe also threatening sanctions on Russia’s central bank’s USD 600 billion-worth of foreign reserves. The expulsion of most Russian banks from the SWIFT system has left Russia isolated in international financial markets, meaning it will pay a huge price for this, regardless of whether it wins in the conflict or not.

For the EU, since it is not at the heart of the conflict, its direct losses are small. However, the financial markets in Europe will be in a state of instability due to the geopolitical impact of the war that is geographically near the region, which will not only hit the financial markets in Europe, but will also drag down the euro. Europe, which has close economic ties with Russia, will also suffer from the sanctions against Russia. European banks are heavily exposed to Russian corporate and financial debt, and any rise in risk could destabilize the global financial system.

The U.S. has little to lose from relevant geopolitical conflicts, and the fact that much of the capital withdrawn from Europe is expected to flow back to the U.S. is undoubtedly beneficial to the relatively stable U.S. capital markets. The continued rise in energy prices will likewise further push up the level of inflation in the U.S., posing long-term risks for its financial market. This will further increase the difficulty of the Federal Reserve’s monetary policy implementation, and the policy risk of the Fed’s “hindsight” will further intensify, bringing instability to the U.S. capital market.

In terms of the impact on China, ANBOUND noted that the USD/RMB exchange rate rose again recently. On February 26, both the onshore and offshore USD/RMB exchange rate traded around the 6.30 mark. Data showed the RMB’s correlation with global market volatility fell to a three-year low early last week, underscoring the currency’s safe-haven ability.

In fact, this means that international capital is seeking new safe-haven, bringing incremental international capital to China’s domestic capital market, making China’s financial market one of the beneficiaries of the crisis. However, China’s ability to maintain the stability of its surrounding environment remains a major consideration for international capital flows in the face of growing geopolitical competition and conflict.

However, the war between Russia and Ukraine will have an impact on energy prices such as oil and natural gas, as well as food and commodity prices. The economic and financial sanctions imposed by the U.S. and Europe will also exacerbate Russia’s recession. Nonetheless, Russia can still utilize its energy resources for its geopolitical interest. Russia is said to have substantially raised natural gas prices.

European natural gas prices have soared 41%. In addition, nearly 35% of palladium, an important element used in the U.S. semiconductor industry, was imported from Russia. Once Russia stops supplying palladium to the United States, the shortage of chips in the U.S. will be exacerbated. At the same time, 90% of neon, another element used in the U.S. semiconductor industry, was imported from Ukraine.

A sharp increase in the price of neon as a result of the war could also have some impact on the U.S. semiconductor industry. Some market institutions have analyzed that crude oil prices may once again exceed the USD 140 mark, which will benefit Russia, a major energy exporter, enough to compensate for the losses caused by rising financial settlement costs. Changes in supply and demand in areas such as energy and commodities will undoubtedly exacerbate global inflationary pressures.

Financial markets have conventionally been one of the most globalized areas, and as geopolitical conflict intensifies, this change will have implications for the long-term evolution of global financial capital markets. In particular, Europe and the United States, which have advantages in the financial field, have imposed financial sanctions on Russia, exposing the global financial market to geopolitical hazards, as well as increasing financial transaction costs and risks. These policy and market changes arising from the Russia-Ukraine conflict will indicate an increase in risk for global capital.

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