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Friday January 21, 2022

Mini-budget matters

January 15, 2022

Meeting the IMF conditions was so imperative for the PTI-led government that it bulldozed 16 legislative items in one go – and that too without accommodating any of the amendments that the opposition had suggested. The legislative agenda that the government carried through included two controversial bills. The opposition did try to create an uproar in and out of parliament but the session continued as planned. The Finance (Supplementary) Bill 2021 and the State Bank of Pakistan (Amendment) Bill 2021 has now passed through the lower house; but interestingly with 168 votes cast during voting on one of the amendments – four votes short of the 172 votes that a prime minister needs to get elected.

When the opposition demanded that the SBP bill be deferred for a day, their demand was turned down. For such an important bill, all democratic norms require that the opposition gets adequate time to debate it. Again, when the opposition members pointed out the quorum, that too was ignored. This is in keeping with what the government has been doing with legislation in the country since 2018. The Senate recommendations on the finance bill also did not find any place on the agenda for consideration. In the recent past too, the government has overruled the Senate by calling joint sessions to enact legislation with simple majority in combined voting. The SBP bill was too serious a matter for legislation to be passed without adequate debate and discussion. Suspension of rules just to bulldoze such a significant piece of legislation is not a wise decision as the bill is about to fundamentally change the way the government of Pakistan runs its economic and monetary policies.

With the mini-budget, the government has imposed Rs350 billion in new taxes on the people of Pakistan who are already reeling under high and unprecedented inflation. Though the bill is likely to revive the payments stalled under the six-billion-dollar extended facility, it will put extra pressure on citizens in the country. It is worth recalling that so far Pakistan has received just around two billion dollars under this facility. The withdrawal of tax exemptions is a major ‘prior action’ that the IMF demanded before the release of the next tranche. The government has tried to make it seem that the withdrawal of some tax exemptions are adjustable, and that these were not taxes, but independent economists and the opposition have tended to disagree with that. The taxes imposed will directly or indirectly hit the country’s people.

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