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.
The Prime Minister Secretariat sent the bill to the President Secretariat on Wednesday evening for assent, two days after it 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.
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.
A well-placed source had earlier told Dawn that Pakistan and IMF will sign the staff-level agreement on Feb 28. This will be followed, according to the source, by the IMF executive board meeting expected in the first week of March.
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.
Through the finance bill, the excise duty on cement has been raised from Rs1.5 to Rs2 per kilogram, a measure estimated to fetch another Rs6bn.
The excise duty on carbonated/aerated drinks has been raised to 20pc from 13pc to raise an additional Rs10bn for the government.
A new excise tax of 10pc was proposed on non-aerated drinks like juices — mango, orange, etc. — to raise an additional tax of Rs4bn.
The increase in excise duty on business-, first- and club-class air tickets will raise an additional Rs10bn for the government.
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.