Pakistan president approves finance bill to pave way for IMF accord

Pakistan president Dr Arif Alvi on Thursday signed the Finance (Supplementary) Bill, 2023, generally known as the mini-budget, as the government rushed to fulfil the International Monetary Fund's (IMF) conditions to unlock an economic bailout that the country needs to avoid the risk of default.

Earlier, the National Assembly of Pakistan had passed the Rs170 billion mini-budget with some tinkering, bringing Pakistan closer to the staff-level agreement with the International Monetary Fund (IMF), but at the cost of pushing people deeper into the poverty trap, reports Express Tribune.

The lower house of parliament had approved the budget with a majority vote in a house devoid of genuine opposition voices. 

The majority of the taxation measures were implemented, although the president had not given his assent when the bill was passed by the National Assembly.

"The president gave the approval to the bill in accordance with Article 75 of the Constitution," the media wing of the President House said in a statement today, DAWN reported.

Under Article 75 (1), the president has no power to reject or object to the finance bill, which is considered to be a money bill as per the Constitution.

The article reads "When a Bill is presented to the President for assent, the President shall, within [ten] days,–(a) assent to the Bill; or (b) in the case of a Bill other than a Money Bill, return the Bill to the Majlis-e-Shoora (Parliament) with a message requesting that the Bill or any specified provision thereof, be reconsidered and that any amendment specified in the message be considered".

With the implementation of all major prior actions, Pakistan is eyeing a staff-level agreement with the IMF this week which will also pave the way for much-awaited credit flows from other bilateral and multilateral lenders.

The IMF had asked the government to raise an additional Rs170 billion in tax revenue. The bulk of tax measures worth Rs115bn was already implemented from Feb 14 through Statutory Regulatory Orders (SROs). Now, after the president's formal assent, the remaining Rs55bn tax measures will come into effect.

The bill had proposed increasing GST from 17 per cent to 25pc on 33 categories of goods covering 860 tariff lines — including high-end mobile phones, imported food, decoration items, and other luxury goods.

Pakistan is in dire need of funds as it battles a worsening economic crisis, with foreign exchange reserves falling to around $3bn, barely enough to cover three weeks of controlled imports. An agreement with the IMF would not only release a $1.2bn bailout but also unlock other avenues of funding for Pakistan.