File photo of Prime Minister Imran Khan. Aamir Qureshi—AFP
Part of ‘prior actions’ required by IMF to revive suspended loan facility, money bill aims to roll back tax exemptions worth Rs. 350 billion
The Pakistan Tehreek-e-Insaf (PTI)-led government is set to table in Parliament a mini-budget of Rs. 350 billion today (Thursday) as part of ongoing efforts to revive a suspended $6 billion loan facility with the International Monetary Fund (IMF).
Information Minister Chaudhry Fawad Hussain on Wednesday told local media that Prime Minister Imran Khan would chair a one-point-agenda meeting of the federal cabinet today to get formal approval for the mini-budget. Once the cabinet approves the Finance (Supplementary) Bill, 2021, it would be placed before the National Assembly.
According to the agenda of the National Assembly, Finance Minister Shaukat Tarin would introduce the bill to amend several laws relating to taxes and duties. The agenda of the Lower House states that the bill would be introduced today, but would not be voted on until subsequent sessions.
Prior to the cabinet meeting, the prime minister would chair a meeting of the ruling alliance’s parliamentary groups to take all coalition members into confidence over the legislation. On Wednesday, the information minister told Geo News that there were no significant objections to the mini-budget either within the government or its allies, adding that he expected the legislation to pass without any issues. This, he claimed, would restore confidence in the country’s economy and help stem the persistent currency devaluation and stabilize inflation.
However, economic experts have warned that the passage of the mini-budget would unleash a new wave of inflation, as it would raise the prices of several essential commodities, including electricity, gas, and petroleum products. In addition to rolling back subsidies worth Rs. 350 billion, it would also end tax and duty exemptions on over 1,700 items, including dairy products, contraceptives and imported food items. Despite this, the government has little choice but to pass the bill imposed on it by the IMF, as the release of the $1 billion tranche of the loan facility is considered essential to enabling the release of funds from other lenders such as the Asian Development Bank and the World Bank.
Despite this, opposition parties have voiced protest at the new bill, warning that it is akin to “surrendering” the country’s financial sovereignty and increase the burden on the common man.
In addition to the money bill, the government must also pass a bill—already approved by the federal cabinet—to grant autonomy to the State Bank of Pakistan.