ISLAMABAD: While the government has moved halfway for meeting the two most critical conditions of the IMF for approving the Sixth Review, it will have to get the approval of the Senate on the controversial State Bank of Pakistan (SBP) Amendment Bill in the coming week to avoid the derailment of the Fund program.
The government has moved only halfway because it got approval of the National Assembly on the Tax Laws Supplementary Bill and the SBP Amendment Bill with a simple majority. Now the second phase will begin next week where the government will have to get the approval of the Upper House of the Parliament (Senate) on the controversial SBP Amendment Bill 2021.
The mini-budget had already passed with few amendments whereby the government-approved few changes had cost of just Rs1 to 1.5 billion, so its budgetary target of fetching Rs343 billion would remain intact. It was yet to be seen how the IMF would respond on the revenue generation effort of Rs343 billion with the help of Tax Laws Supplementary Bill 2021.
“If the SBP’s Amendment Bill gets stuck up in the Senate and the government fails to get approval, then it would be left with no other option but to summon a joint sitting of the parliament in a hurry to get approval of this bill. Otherwise, the deadline of January 28 or 31 for convening the IMF's Executive Board meeting cannot be met," said the sources.
There is risk involved in case of delays because if Pakistan fails to fulfill two major conditions of the IMF, including getting parliamentary approval on mini-budget and SBP’s Amendment Bill till February, then the IMF might ask for holding fresh negotiations on the basis of latest data till December 31, 2021 on macroeconomic front.
Earlier, Minister for Finance Shaukat Tarin had hinted about it, stating that the IMF had asked for fresh negotiations but he had declined. In case of delays of meeting the two key conditions, the IMF might again raise this issue of holding fresh negotiations on the basis of available latest data. In such circumstances, the IMF may come up with the prescription of new tough conditions in the wake of worsening macroeconomic situation, so the government is making last ditch effort to avoid any such unwarranted situation.
Through the approved Tax Laws Supplementary Bill 2021, the National Assembly approved to withdraw 17 percent GST on bicycle which was earlier proposed. The government also withdrew 17 percent GST on red chillies and iodized salt but imposed GST on bread, vermicelli, naan, chapatti, sheermal, bun, and rusk sold by all food shops, bakeries and restaurants that were integrated with the FBR through POS machines.
The government jacked up the sales tax rate on imported electric vehicles (EV) to 12.5pc but GST on hybrid vehicles of up to 1800cc cars remained unchanged at 8.5pc. On imported cars of 1001-1799cc engines, the FED was doubled from 5pc to 10pc, on 1800-3000cc engines, the rates were increased from 25pc to 30pc and from 3001cc engines and above, the rate went up from 30pc to 40pc.
The National Assembly also passed the National Information Technology (NIT) Board. The NITB bill states that it is expedient to provide for establishment of the National Information Technology Board for e-governance across the country in line with the vision and policy of the federal government to serve the public in more effective and efficient manner through due advisories and consultancies and provision of e-governance software applications to federal ministries and divisions, including their attached departments, sub-ordinate offices and autonomous bodies.