Mini-budget withdrawn from cabinet after stiff opposition

ISLAMABAD: In the wake of increasing difficulties on the political front, the government has withdrawn for the time being the mini-budget encompassing Tax Laws (Fourth) Amendment Bill, from the federal cabinet and decided to hold further consultations with Prime Minister Imran Khan for devising a fresh strategy.

The unveiling of the mini-budget has proven to be a bitter pill to swallow for the incumbent PTI-led government. The government wants to convince the IMF that it would present the mini-budget through a Presidential Ordinance but the Fund staff shot down the proposal The revival of the IMF programme has entered into a danger zone because if the Fund did not budge from its earlier demands to get parliamentary approval for two key bills, including Tax Laws (Fourth) Amendment Bill and SBP’s Autonomy Bill, then the revival of IMF programme would be at stake.

Now the government is all set to explore options once again for convincing the IMF for the promulgation of a Presidential Ordinance for withdrawal of GST exemptions in order to fetch Rs350 billion into the national kitty on an annual basis because the government might find it hard to pass such piece of money bill with the support of its political allies.

The IMF had sternly rejected the proposal for promulgation of Presidential Ordinance in the past 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 finalized by 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 Secondly, the Tax Laws (Fourth) Amendment Bill was withdrawn because the government could not afford a backlash on it when the CPI-based inflation was already standing at 11.53 percent for November 2021. The second thought surfaced after the 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 sources confirmed to The News here on Tuesday. The official sources said that Prime Minister Imran Khan would soon hold a consultative meeting with the Adviser to PM on Finance 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, for meeting all prior actions placed 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. “We will renegotiate with the IMF for seeking permission to promulgate Presidential Ordinance to abolish the GST exemptions. Pakistani authorities are now in Catch 22 situation, having no clue how to proceed further because without the IMF programme, the economic difficulties are going to multiply in coming months,” concluded the official sources.