ISLAMABAD – The federal government has scheduled a session of the National Assembly today in response to President Arif Alvi’s refusal to sign the legislation imposing higher taxes.
Prime Minister Shehbaz Sharif presided over a federal cabinet meeting during which the country’s economic and political status was discussed. The attendees of the conference also consulted on the mini-budget ordinance. The government opted not to introduce a mini-budget bill.
The finance bill will be submitted to the national parliament, and Ishaq Dar, the minister of finance, will inform the chamber on the law. The mini-budget will be submitted to the Senate tomorrow (Wednesday) after approval by the House of Commons.
In this context, the Senate will meet tomorrow at 4 p.m. under the leadership of Chairman Saddiq Sanjrani. The budget bill proposes the imposition of taxes totaling Rs170 billion, and the cabinet has already authorised the imposition of these levies.
President Arif Alvi met with Finance Minister Ishaq Dar earlier today, during which the latter updated the president on the continuing talks with the International Monetary Fund.
The president lauded the work of the administration in negotiating a possible agreement with the IMF, reiterating that the state will honour the IMF’s commitments.
The minister stated that the government intended to levy more levies through the ordinance. The president denied the government’s request.
Dr. Alvi requested that the financial czar keep the suggestions for the budget confidential from the legislature. He requested that Dar quickly convene a parliamentary session to enact a law as soon as possible.
It should be noted that the introduction of the mini-budget is in response to directives from the International Monetary Fund (IMF), which wants Pakistan to enhance its income and expand its tax base.
The government hiked gas and electricity rates on February 13 to comply with yet another IMF demand, hence increasing the burden on regular citizens.
Pak-IMF discussions continue
Pakistan and the International Monetary Fund (IMF) have begun discussions about the disbursement of the ninth tranche of the Extended Fund Facility (EFF).
The federal government hopes that these virtual meetings will result in an agreement that will alleviate the mounting strain on the nation’s struggling economy.
Finance Secretary Hamed Yaqoob Sheikh said that “the length (of the negotiations) cannot be determined, but we want to conclude them as soon as possible.” Islamabad and an IMF mission engaged in extensive negotiations for ten days, from January 31 to February 9, but were unable to strike an agreement.
In a previous statement, the IMF indicated that both parties had agreed to remain active and that “virtual conversations would continue in the coming days to finalise implementation specifics” of the measures outlined in Islamabad.
The International Monetary Fund (IMF) and Pakistan were to start discussions digitally in an effort to negotiate an agreement that would release vital money to keep the cash-strapped south Asian nation afloat.
A Pakistani official informed an international wire agency on Monday that the two parties were unable to achieve an agreement last week, and that a visiting IMF mission left Islamabad after ten days of discussions, but that negotiations will continue. Pakistan is in desperate need of funding as it struggles with a severe economic crisis.
Finance Secretary Hamed Yaqoob Sheikh told Reuters in a text message that negotiations will resume on Monday, but that the duration of the discussions could not be determined. “We aim to conclude things as quickly as possible,” he said.
The talks focus on securing an agreement on a reforms plan under the country’s 2019 $6.5 billion bailout package. A consensus on the ninth programme review would release nearly $1.1 billion.
Friday, at the conclusion of its 10-day visit to Islamabad, the IMF issued a brief four-paragraph statement emphasising that “timely and decisive implementation of policies along with resolute financial support from official partners are essential for Pakistan to successfully regain macroeconomic stability.”
It had also said that virtual conversations would continue to finalise the implementation specifics of policies, meaning that an agreement to restart the project via a staff-level agreement may still take some time as Pakistan works to carry out the preceding activities.
Nathan Porter, the mission leader, was cited in a statement as saying, “The IMF team appreciates the Prime Minister’s commitment to undertake measures necessary to protect macroeconomic stability and thanks the authorities for the fruitful conversations.”
“During the trip, significant progress was achieved on policy measures to address internal and foreign imbalances.
“Priorities include strengthening the fiscal position with permanent revenue measures and reducing untargeted subsidies, while expanding social protection to assist the most vulnerable and those affected by floods; allowing the exchange rate to be determined by the market to gradually eliminate the foreign exchange shortage; and enhancing energy provision by preventing further accumulation of circular debt and ensuring the viability of the energy sector.
Pakistan’s capacity to effectively reestablish macroeconomic stability and progress its sustainable development depends on the prompt and decisive execution of these measures, as well as the firm financial backing of its official partners.