Daily Times

Industry analysts have generally expressed both positive and negative perceptions about the incumbent government’s amendments to the budget for fiscal 2018-2019 announced Tuesday.

While some lauded the budget for giving priority to textile and corporate sectors which will serve as a backbone to industrial growth, others expressed concerns over the inadequate attention given to certain critical areas such as trade and current account deficits and taxation.

“We see budget to be have a positive impact on the market, However, it does lack concrete steps to address country’s ailing tax revenues”, said a Research analyst at IGI Securities.

The analyst sees construction activity picking pace owing largely to negating concerns over public development projects cut downs and government aiming to carry on with its cheap housing projects. Further assuring comments by finance minister on construction of dams and other road network will bode well for the sector in general.

“For Fertilizer changes in gas prices will be countered through increase in subsidy benefiting country’s agronomics. Other sectors such as commercial bank, textiles and OMC will remain relatively unaffected through such changes. Lastly and most importantly we see automobile to benefit from removal of sale/purchase of new vehicle by non-tax filers”, he added.

An analyst at Shajar Research says the budget has a positive bias for the listed space where we believe the government was able to give some incentives to the local corporate and textile sectors.

He said this is the first time that investors get a taste of the policy direction of the current government; the government has emphasized on its commitment to protect the underprivileged whilst also allowing a more economically conducive environment for businesses.

JS Research’s analyst say from the stock market’s perspective, street expectations revolved around potentially stringent and belt-tightening measures by the Finance Minister; however, the actual announcements carried a populist tone.

“Restrictive measures earmarked for the curtailment of twin deficits, which was the need of the hour, seem to have gone unattended”, he added.

He said the government needs to bring down the fiscal deficit by 1.5% of GDP (or Rs500bn) during FY19 (5.1% minus 6.6%). In contrast, relief measures already announced stand close to Rs150 billion, which would further increase the deficit to Rs 650 billion. Only time will tell whether the measures which were not clearly quantified, will be sufficient to bring down the deficit to the targeted level, added the analyst.

Published in Daily Times, September 19^th 2018.