A crucial tax amendment bill to fulfil the conditions of the International Monetary Fund (IMF) to revive a stalled loan programme that the country needs to stave off default was presented in both houses of parliament on Wednesday.
Finance Minister Ishaq Dar introduced the Finance (Supplementary) Bill 2023 first in the National Assembly and then in the Senate.
The Pakistani government approved a proposal last night to increase the general sales tax (GST) rate from 17 to 18 per cent and to raise the Federal Excise Duty (FED) on cigarettes. The aim is to generate an additional Rs115 billion out of Rs170 billion, which was agreed upon by Pakistan in accordance with the IMF conditions.
Through the implementation of the “mini-budget,” led by the Pakistan Democratic Movement (PDM)-led government, the country intends to reduce the budget deficit and enhance its tax collection efforts to meet the conditions set by the IMF, a Washington-based lender.
The National Assembly will not be referring the bill to the Standing Committee on Finance and Revenue for further review, while the Senate has sent the legislation to the relevant committee. Officials at the Ministry of Finance have stated that they anticipate the bill to be passed by Thursday morning, which will allow for the receipt of funds not only from the IMF but also from other multilateral and bilateral sources.
Last week, Pakistan and the International Monetary Fund (IMF) were unable to reach an agreement, and the visiting IMF delegation left Islamabad after 10 days of talks. However, negotiations are set to continue. The Pakistani economy, valued at $350 billion, is in dire need of financial assistance as it grapples with a severe economic crisis.
In an effort to appease the IMF, the government initially intended to implement the fiscal measure via an ordinance. However, President Dr Arif Alvi recommended that the administration obtain the parliament’s approval instead.
During his address to the lower house, Finance Minister Dar highlighted the unprecedented crises the nation is currently facing due to the “substandard” policies of the Pakistan Tehreek-e-Insaf (PTI) government. In contrast, the country had experienced economic growth during the previous government led by the Pakistan Muslim League-Nawaz (PML-N), during which the Gross Domestic Product (GDP) had increased by $112 billion.
“The PML-N always tries to take fewer loans. Foreign investment had also increased during PML-N’s tenure. In contrast, during the PTI’s government, the loans hit record highs, and a common man’s income also plunged.”
According to Geo, the finance minister stated that in addition to the challenges that the current government is confronting as a result of the Pakistan Tehreek-e-Insaf’s (PTI) policies, the country suffered losses exceeding $8 billion due to last year’s floods.
“But, we should always prefer the state over politics,” he reiterated — the mantra that PDM leaders have time and again propagate as they face an uphill task on the economic front.
This is a developing story…
