ISLAMABAD (Eshfak Mughal):- The Federal Government led by Premier Shehbaz Sharif has decided to present the mini-budget bill in the parliament to slap new taxes worth Rs.170 billion in compliance of the prior conditions agreed with the International Monetary Fund (IMF) after refusal by President Arif Alvi to promulgate presidential ordinance.
Pakistan and the IMF have started virtual talks after 10 days of face-to-face discussions in Islamabad last week on how to keep the country afloat ended without a deal.
The Federal Cabinet has approved the mini budget to collect Rs.170 billion additional tax revenue during remaining period of the current fiscal year ended on June 2023.
The govt wants to elevate general sales tax from 17 percent to 18 percent which will give additional revenue of around Rs.60 billion to the national kitty. The govt will also slap tax and duties on numbers of luxuries items and to withdraw the tax relaxation or exemptions to different sectors including export oriented sector.
Senior officials of the finance ministry told the scribe that the bill would be laid down before the National Assembly and subsequently Senate today, following which both houses would refer the matter to their respective finance committees for further deliberations.
Once the bill was approved by both houses, it would be sent to the president for ratification, the officials said, noting that the move would fulfill all prerequisites of the IMF programme.
“Then, IMF and Pakistan will sign the Memorandum of Economic and Fiscal Policies (MEFP),” officials said and added, “Following which, the IMF executive board, on the recommendation of its team that visited Pakistan, will approve the release of the tranche”.
After securing the IMF loan, Pakistan is expecting about $5 billion from friendly countries including China, Saudi Arabia, UAE and other multilateral lenders i.e., World Bank, Asian Development Bank, and the Asian Infrastructure Investment Bank (AIIB).
It is important to mention here that the Federal Minister for Finance and Revenue Senator Ishaq Dar met Dr Alvi at the President’s House on Tuesday.
“The president advised that it would be more appropriate to take parliament into confidence on this important subject, and that a session be called immediately so that the bill is enacted without delay,” a statement issued by the President House said.
The president, in the meeting, was apprised by the finance minister about the government’s progress in talks with the international lender.
Dar informed Dr Alvi that the government wanted to raise additional revenue taxes through the promulgation of the said ordinance. He also spoke about all the agreed-upon modalities with the global money-lending institution.
The finance minister, on February 10, said that talks with the IMF ended “positively”, however, the government would have to impose Rs.170 billion in taxes through a mini-budget to revive the loan program.
Addressing the media hours after the IMF issued its statement on its talks with Pakistan, Dar confirmed that Islamabad had received the draft of the MEFP from the Washington-based lender.
Meanwhile, Dr Alvi appreciated the efforts of Prime Minister Shehbaz Sharif-led government in negotiating an agreement with the IMF and also assured that the state of Pakistan would stand by the commitments made to the IMF.
The country’s economy is in dire straits, stricken by a balance-of-payments crisis as it attempts to service high levels of external debt amid political chaos and deteriorating security.
Inflation has rocketed, the rupee has plummeted and the country can no longer afford imports, causing a severe decline in the industry.
PM Shehbaz previously called the conditions for the $1.1 billion loan installment “beyond imagination”.