ISLAMABAD: After rejecting the IMF’s request to deliver a mini-budget through ordinances, the government has opted to introduce two bills in parliament next week to eliminate GST exemptions, increase withholding tax on the telecom industry, and give the State Bank of Pakistan autonomy (SBP).
Pakistan’s desire to propose the mini-budget through presidential decrees was denied by the IMF. The Tax Laws (Fourth) Amendment Bill, as well as the SBP’s Amendment Bill, will now be presented to parliament next week.
The government may decide to get the approval of the federal cabinet through the circulation of summaries or it may be tabled in the next cabinet meeting. “We will lay down two bills before the parliament next week as efforts are underway to get all required procedures completed till January 12, 2022, when the IMF’s Board will consider approval for completion of the 6th review and release of $1 billion tranche under the $6 billion Extended Fund Facility (EFF),” top official sources confirmed while talking to The News here on Thursday.
The top official said that the IMF did not agree to the presidential ordinances, so the government would submit the bills before the parliament. The official was confident that they had locked the calendar date of January 12, 2022, for completion of all prior actions, including approval of two key bills from the parliament within the envisaged deadline and then get approval from the Fund’s Executive Board.
There is a very tight schedule but the government has devised its strategy in consultation with PM Imran Khan and it seemed confident that all parliamentary procedures would be accomplished, probably through bulldozing the bills in haste.
“We possess sufficient time and we will meet all deadlines,” said one top official while talking to The News here on Thursday evening. It seems that the government will bulldoze the bills related to withdrawal of GST exemptions and raising WHT on telecom sector from 10 to 15 percent in order to raise tax revenues of Rs350 billion.
The official said that the government would also get approval on controversial SBP Amendment Bill through which the Monetary and Fiscal Coordination Board was proposed to be abolished. Under the proposed bill, the federal government will not be able to get borrowing from the SBP.
The tenure of governor SBP will be extended by up to five years from the existing period of three years with the possibility of an extension in tenure for second term. Different government circles are still uncomfortable with the controversial SBP Amendment Bill, so chances exist that it will be tabled before the federal cabinet in its next meeting and after getting approval on revised draft, then it would be submitted before the parliament. The Federal Minister for Law, Farogh Naseem, was not present in the last cabinet meeting, so the draft done by the Cabinet Committee on Legislative Business (CCLC) not be ratified. Federal Minister for Law was still working on it for proposing more changes into the controversial SBP’s Amendment Bill and it took more time for submitting it before the cabinet and subsequently before the parliament.
When contacted, Spokesperson for Adviser to PM on Finance said that the IMF Board would consider Pakistan’s request for completion of the 6th review and release of next tranche on January 12, 2022 and all prior actions would be fulfilled within the desired deadlines.