Pakistan and IMF talk
Pakistan and the International Monetary Fund (IMF) on Wednesday failed to break impasse on a new contentious issue of permanently imposing a Rs3.82 per unit debt surcharge to recover Rs284 billion more from electricity consumers.
Against the government’s decision to impose the new surcharge for eight months (March-October 2023), the IMF has asked the government to keep the levy as a permanent fixture in electricity bills until the government settles the Rs800 billion circular debt parked in a company.
Meanwhile, confusion prevailed on Wednesday when the finance ministry took the position different from what the Power Division had communicated to the IMF a day earlier.
This once again underscored lack of coordination among key government departments, which is contributing towards an inordinate delay in reaching a staff-level agreement with the IMF.
A meeting between Finance Minister Ishaq Dar and the IMF Mission Chief Nathan Porter ended with a note that the two sides would meet again to sort out the issue, according to officials privy to these discussions.
Alvi approves mini-budget
President Dr Arif Alvi on Thursday approved the Finance (Supplementary) Bill 2023, also known as the mini-budget. The approval was given under Article 75 of the Constitution which states that when a bill is presented to the president for assent, the president shall, within 10 days assent to the bill. Earlier, the National Assembly had passed the Rs170 billion mini-budget with some tinkering, bringing Pakistan closer to the staff-level agreement with the International Monetary Fund (IMF), but at the cost of pushing people deeper into the poverty trap. The lower house of parliament had approved the budget with a majority vote in a house devoid of genuine opposition voices. The approval has given effect to the new taxation measures of Rs170 billion, having an annual impact of about Rs550 billion.
The majority of the taxation measures were implemented, although the president had not given his assent when the bill was passed by the National Assembly.
SBP controls inflation
Pakistan’s central bank has said that controlling inflation and having a vibrant financial sector are the top two priorities while supporting the government for implementing its economic growth policies comes at third place. Speaking at the sixth “Pakistan Leadership Conversation 2023”, organised by the ACCA on Wednesday, State Bank of Pakistan (SBP) Deputy Governor Sima Kamil said that the central bank had three clear objectives at present. “First (is) price stability, second (is) financial sector stability, (and third is) supporting the government’s economic growth policies as long as first two objectives are not compromised.” She said the central bank had planned to deploy Big Data and artificial intelligence (AI) technologies in the near future to improve work on price stability, as stable inflation would provide a strong basis for sustainable economic growth. “We at SBP are now strengthening our statistical department. In future, we will utilise Big Data and AI to improve the quality of data for measuring CPI for inflation while tracking multiple layers of non-traditional data using satellite images,” she said.
IMF probable to announce EFF deal
Federal Minister of Commerce Syed Naveed Qamar said on Wednesday that the International Monetary Fund (IMF) was likely to announce its staff-level agreement on the Extended Fund Facility (EFF) with Pakistan this week.
“Pakistan has taken all the measures needed to unfreeze a $6.5 billion credit line and expects to clinch the deal ‘any day now’,” the minister said in an interview with Bloomberg. After formal announcement by the fund, Pakistan will get a $1.2 billion tranche under the EFF.
The minister stated that the IMF agreement would give investors and creditors confidence that “Pakistan’s economy is now stabilising and it has taken all the right steps, so in that sense their money will remain protected”.
“The IMF programme is the beginning, not the culmination of all other monies flowing in,” he remarked.
The minister maintained that a pickup in imports, once the nation boosted its foreign currency reserves, would also benefit exports.
Federal board of revenue seizes PIA bank accounts yet again
The Federal Board of Revenue (FBR) has seized the bank accounts of the Pakistan International Airlines (PIA) yet again for not paying its taxes amounting to Rs2.86 billion.
“The government dues amounting to Rs2,864 (M) are outstanding against M/S Pakistan International Airlines NTN: 0803450 for multiple tax periods,” read a letter written by Deputy Commissioner Inland Revenue Unit-02 Sharjeel Ahmed to the bank’s manager.
“Now therefore, in exercise of powers conferred under Section 14(3) read with Rule 60(1)(d) of the Federal Excise Act, 2005, I do hereby issue/serve this notice for attachment of [the] bank account … and any other bank account maintained against NTN: 0803450 of the defaulter maintained with your bank if any, with immediate effect till the amount of tax is paid or recovered in full,” it further stated.
National Assembly proposes super tax levy
The National Assembly Standing Committee on Finance and Revenue has recommended a comprehensive super tax applicable to all entities, which will be based on their profit levels, as proposed by the Federal Board of Revenue (FBR).
The committee, in a meeting, demanded a progress report from the authorities concerned on measures taken to investigate the conduct of banks allegedly involved in exchange rate manipulation.
During discussion, Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha gave assurances that the government had devised a plan to implement macroeconomic and structural policies with a view to minimising economic imbalances, fostering a long-lasting inclusive growth and generating employment opportunities.