Amended finance bill sails through NA: Key steps taken to keep IMF in good humour

ISLAMABAD: A day after the government made several changes, including fiscal tightening measures dictated by the International Monetary Fund (IMF), to secure the critical bailout, the National Assembly on Sunday passed the Finance Bill, 2023-24 with certain amendments in the proposed budgetary measures and the total outlay of Rs14.48 trillion.

The revised budget aims for an additional Rs215 billion in tax revenue alongside a cutback of Rs85 billion in public spending for the upcoming fiscal year. However, this does not affect the federal development budget or the salaries and pensions of government employees.

With the changes in the finance bill, 2023-24, the revenue target of Federal Board of Revenue (FBR) went up from Rs9.2 trillion to Rs9.415 trillion, provincial revenue from Rs5.276 trillion to Rs5.39 trillion, federal government expenditures from Rs14.46 trillion to Rs14.48 trillion, and the pension volume from Rs761 billion to Rs801 billion. However, the subsidy volume would stand at Rs1.064 trillion, and the grants volume at Rs1.405 trillion.

Pakistan will look to impose Rs215bn additional taxes after IMF talks: Dar

The Rs14.48-trillion budget was passed during the NA session which lacked quorum as there were only 70 lawmakers on treasury benches and two on opposition benches.

Foreign Minister Bilawal Bhutto Zardari, his father Asif Ali Zardari and the opposition Raja Riaz, a dissident Pakistan Tehreek-e-Insaf (PTI), and a large number of other MPs, did not turn up in the house.

At the outset of the session, Finance Minister Ishaq Dar said that it envisages concrete measures to put the country on the path of development.

He said that the country has achieved economic stability to a great extent as a result of the political sagacity of Prime Minister Shehbaz Sharif. “We put our political capital at stake to stabilize the economy.”

He expressed his gratitude to the prime minister, the cabinet members, and the coalition partners for their support in passage of budget.

During the session, Maulana Abdul Akbar Chitrali of Jamaat-e-Islami moved a resolution to send the budget to Council of Islamic Ideology (CII).

He insisted that the budget was based on a system of interest, adding that by accepting it the government was going against the directives of Federal Shariat Court (FSC). “Not taking the CII’s opinion on the finance bill will be a violation of the FSC’s decision,” he added.

Ayaz Sadiq, the minister for economic affairs, opposed the resolution, saying that some parliamentarians had to go for Haj and called for wrapping up budget proceedings.

The NA speaker put the resolution up for vote after which the resolution was rejected.

The finance minister then presented the budget for the new fiscal year with amendments for clause by clause approval.

Amendments suggested by Saira Bano, Nisar Cheema, Zahra Wadood Fatimi, Nawab Sher Waseer, Asiya Azeem, and Maulana Abdul Akber Chitrali were put to the house for voting but they were rejected except for Maulana Abdul Akbar Chitrali’s amendment.

The proposed amendment by Maulana Chitrali was accepted, under which the chairmen of standing committees would be allowed cars up to 1,200cc.

In the light of the Senate recommendations, the National Assembly also approved the amendments proposed in the Finance Bill 2023-24 by the Finance Minister.

Under the changes in the budget, the government now aims to generate another Rs215 billion in taxes and cut spending by Rs85bn in the next fiscal year, without reducing the federal development budget or the salaries and pensions of government employees.

This will revise the government’s revenue collection target to Rs9.415 trillion and put total spending at Rs14.48 trillion. The share of the provinces would be increased to Rs5.39 trillion from Rs5.28 trillion.

The allocation for the Benazir Income Support Programme has also been revised from Rs450bn to Rs466bn for FY24. Besides, the petroleum development levy will be raised from Rs50 to Rs60 per litre.

The budget envisages the federal Public Sector Development Programme (PSDP) worth Rs1150 billion, which is the highest ever in terms of its size, which the government claims its commitment to improve people’s living standard.

The changes in the budget came a day after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.

The bill now would go to the President for assent who will sign it into a law and effective from July 1, 2023.

During the session, while speaking on a point of order, Defence Minister Khawaja Asif showed optimism that the deal will be struck with the IMF which will bring back economic stability.

Minister for Climate Change Sherry Rehman said priority has been given in the budget for the reconstruction and rehabilitation of flood affected areas.

However, she regretted that the world has forgotten those affected by the disaster in Pakistan last year. She said Prime Minister Shehbaz Sharif fought the case of climate justice at a conference in Paris.

Reuters adds: Parliament on Sunday approved the government’s 2023-24 budget which was revised to meet International Monetary Fund conditions in a last ditch effort to secure the release of more bailout funds.

The IMF in mid-June expressed dissatisfaction with the country’s initial budget, saying it was a missed opportunity to broaden the tax base in a more progressive way.

The revised budget was approved a day after Finance Minister Ishaq Dar introduced new taxes and expenditure cuts.

“The (finance) bill is passed,” House Speaker Raja Pervaiz Ashraf said in a live TV broadcast on Sunday.

With currency reserves barely enough to cover one month’s imports, Pakistan is facing an acute balance of payment crisis, which analysts say could spiral into a debt default if the IMF funds do not come through.

There are five days to go before the $6.5 billion Extended Fund Facility (EFF) agreed in 2019 expires on June 30. The IMF has to review whether to release some of the $2.5 billion still pending to Pakistan before then. The tranche has been stalled since November.

Dar also announced on Saturday a number of other changes, including raising a petroleum levy and lifting of all restrictions on imports, which has been one of the major concerns of the IMF as part of its fiscal tightening measures for the South Asian economy.

The budget revision came after Prime Minister Shehbaz Sharif met IMF Managing Director Kristalina Georgieva on the sidelines of a global financing summit in Paris last week, followed by a marathon three-days of virtual talks between the two sides. Under the $6.5 billion EFF’s ninth review, negotiated earlier this year, Pakistan has desperately been trying to secure the IMF funds, which are crucial to unlock other bilateral and multilateral financing for the debt-ridden country.

Copyright Business Recorder, 2023