The government has taken back the mini-budget, including the Tax Laws (Fourth) Amendment Bill, for the time being from the federal cabinet agenda due to recent incidents on the political front, including defeat in the local government elections in Khyber Pakhtunkhwa.
It is learnt that a “new strategy is being devised” in consultation with Prime Minister Imran Khan.
The unveiling of the mini-budget turned out to be a disappointment for the incumbent government since the International Monetary Fund (IMF) staff turned down the government’s proposal to present a mini-budget through a presidential ordinance.
This has put the revival of the IMF programme on hold because it wouldn’t be possible if the Fund doesn’t show flexibility in demanding the parliamentary approval for two key bills, including Tax Laws (Fourth) Amendment Bill and SBP’s Autonomy Bill.
In this scenario, the government has to explore all options once again to convince the IMF for the promulgation of a presidential ordinance for withdrawal of GST exemptions to fetch Rs350 billion into the national kitty because it might find it hard to pass such a chunk of the money bill with the support of its political allies.
The IMF had in the past rejected the proposal for promulgation of a money matter through the presidential ordinance, but the government seems to be left with no option but to engage the IMF again to convince it. The government wants that the promulgation of the ordinance should be allowed till the upcoming budget and to withdraw GST exemptions as part of the next budget through Finance Bill 2022.
The two bills are pending approval from parliament without which the revival of the IMF programme will be simply impossible.
A top official said that the cabinet could not consider the State Bank of Pakistan (SBP) Autonomy Bill in Tuesday’s meeting because the federal law minister was not present in the meeting.
So, the cabinet ratification on work finalised by the Cabinet Committee on Legislative Business could not be taken up. Secondly, the Tax Laws (Fourth) Amendment Bill was withdrawn because the government could not afford a public backlash when the CPI-based inflation was already standing at 11.53 percent for November 2021. The second thought surfaced after increasing difficulties emerged in the wake of a severe defeat in the local government elections in many parts of PTI’s stronghold province of Khyber Pakhtunkhwa.
“Prime Minister Imran Khan has advised to withdraw the Tax Laws (Fourth) Amendment Bill in today’s cabinet meeting and decided to devise a fresh strategy to tackle this issue. The government was perturbed at the recent political developments in the KP on account of its defeat,” top official said.
It is learnt that Prime Minister Imran Khan would soon hold a consultative meeting with Shaukat Tarin and other members of the economic team to devise a fresh strategy to tackle these complex issues.
One top official said that they were still making last-ditch efforts to meet the deadline of January 12, 2022, by the IMF staff and holding of Fund’s Executive Board meeting for completion of the Sixth Review and release of $1 billion tranche under $6 billion Extended Fund Facility.