Pakistan tables finance bill in parliament to unlock IMF funding 

Pakistan’s Finance Minister Ishaq Dar (R) speaks during a press conference in Islamabad on February 10, 2023. (Photo courtesy: AFP/FILE)
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Updated 15 February 2023
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Pakistan tables finance bill in parliament to unlock IMF funding 

  • Pakistan intends to collect Rs170 billion in additional taxes to meet IMF requirements for loan
  • Tax increases proposed on cement, cigarettes, sugary drinks, weddings, luxury items, air travel

ISLAMABAD: Pakistan's Finance Minister Ishaq Dar tabled a supplementary finance bill in parliament on Wednesday to collect additional taxes to revive a stalled $6.5 billion loan program with the International Monetary Fund (IMF) to stave off an economic crisis.

Dar introduced the bill first in the National Assembly and later, in the Senate. Pakistan has been struggling to revive a $1.1 billion loan program with the IMF, which has imposed tough conditionalities on the South Asian nation already struggling with surging inflation and macroeconomic problems. 

The reserves of Pakistan's central bank have declined to $2.9 billion, according to official figures. Expert warn the country can face a balance-of-payments crisis. 

"The purpose of this bill is to give legislative effect to the taxation proposals of the federal government to stabilise economy in aftermath of recent floods," a copy of the bill, seen by Arab News, reads.

The finance minister said the legislation would enable Pakistan to collect additional taxes of Rs170 billion to meet one of the IMF's demands. The government has already jacked up tariffs on electricity and gas to meet the international lender's conditions.  

"This legislation will help us overcome fiscal and current account deficits," the minister said, adding that the Prime Minister Shehbaz Sharif-led coalition government has taken "tough decisions" to save the state from defaulting on its debts.

He announced the government's move to increase the general sales tax (GST) rate from 17 percent to 18 percent. Dar said Pakistan has also enhanced federal excise duty (FED) on cigarettes and sugary drinks to generate additional revenues. 

The minister said tax on luxury items has also been increased from 17 percent to 25 percent. 

The bill has also proposed that the FED on business and first-class air tickets be increased by up to 50 percent and a 10 percent withholding adjustable advance income tax on marriages in wedding halls. It has also called for the FED on cement to be increased from Rs1.5 per kilogram to Rs2 per kilogram.

Dar said the government was not levying any additional taxes on essential goods such as wheat, rice, meat, milk, and eggs. "We are trying to protect the common people and ensuring that there would be a minimum burden on them," he said.

He assured the parliament that the prime minister and his cabinet would also be implementing austerity measures in the face of tough economic conditions, adding that Sharif would take the public into confidence on these measures soon.

The IMF delegation was in Pakistan from January 31 to February 9 to discuss the revival of the program but departed without signing a staff-level agreement with Islamabad. The government is now holding virtual talks with the Washington-based lender, hoping to reach an agreement by the end of this week.

The finance bill would become law after it passes from the National Assembly and is sent to the president for approval, which the government expects would be done by tomorrow, Thursday. 


Pakistan health ministry to launch national program to address malnutrition in country

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Pakistan health ministry to launch national program to address malnutrition in country

  • Pakistan has witnessed extensive consequences of malnutrition, including birth defects, impaired brain development, reduced work capacity
  • Ministry says the government is cognizant of serious situation of malnutrition aggravated by global conflicts, climate change leading to food insecurity

ISLAMABAD: Pakistan’s national health ministry said on Saturday it had decided to launch a national nutrition program to address the issue of malnutrition in the country, in coordination with the planning ministry and provincial governments.

The decision was made at a maiden meeting of the National Nutrition Task Force, presided over by Health Secretary Nadeem Mahbub. The high-level task force was constituted on the directives of Prime Minister Shehbaz Sharif.

Pakistan has witnessed extensive consequences of malnutrition, including devastating birth defects for babies, impaired brain development in young children, and reduced work capacity among adults. 

The health ministry said the incumbent government was cognizant of the serious situation of malnutrition aggravated by global conflicts and climate change leading to food insecurity and high inflation.

“The [task force] has been constituted to provide technical oversight and guidance on Nutrition Policy and programming, developing future directions and roadmaps for nutrition landscape in the country and facilitate and carry out inter-sectoral and multisectoral coordination and advocacy around nutrition,” it said in a statement.

The ministry said it had directed its nutrition wing to prepare a new PC1, planning tool for the development of a project, in coordination with the Planning Commission and the Benazir Income Support Program (BISP) to avoid duplication and cover the areas and interventions which were not covered previously.

In his remarks, Additional Health Secretary Syed Moazzam Ali highlighted the importance of fresh data on malnutrition for proper policy and programming and stressed the need to carry out the National Nutrition Survey as soon as possible.

“Provinces are the real game changers in the success of any program and their strong collaboration and commitment toward nutrition programming is pivotal to address malnutrition in the country,” he said.

Special Health Secretary Syed Waqar-ul Hassan stressed upon the need for convergence of all sectors and stakeholders to address the root cause of malnutrition, highlighting that the ministry alone could not eliminate malnutrition.

The meeting was attended by country representatives of the United Nations World Food Program (WFP), United Nations Children’s Fund (UNICEF), representatives from donor and UN organizations, international and national NGOs, line ministries and provincial government representatives along with academia.

Dr. Mehreen Mujtaba, nutrition director at the health ministry, shared Pakistan would hold its first-ever National Nutrition Conference in June-July, this year to get the guidance of local and international experts in the fields of health and nutrition, thanking participants for their valuable contributions to the meeting.


Ex-president Alvi denies being picked to head PTI amid reports of talks with army

Updated 11 May 2024
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Ex-president Alvi denies being picked to head PTI amid reports of talks with army

  • The statement came amid speculation about Alvi being made PTI chairman to resolve party’s issues with establishment
  • These speculations create confusion in a party whose leadership is ‘wrongfully and unjustly incarcerated,’ Alvi says

ISLAMABAD: Arif Alvi, former president and a close aide of jailed former prime minister Imran Khan, on Saturday denied being appointed chairman of Khan’s Pakistan Tehreek-e-Insaf (PTI) opposition party.

The statement came amid widespread speculation about Alvi being made the PTI chairman to resolve the party’s issues with the powerful military establishment whom Khan has accused of sidelining him, according to some media reports.

The reports suggested the former president had been tasked with the “important” job following his meeting with Khan at Adiala jail in Rawalpindi, however, Alvi denied these reports.

“There is unnecessary speculation that Mr.@ImranKhanPTI intends to appoint me as Chairman of the party. There is no such thing being envisaged by my leader nor was it discussed in my meeting with him,” he said on X.

“These speculations create confusion in a party whose leadership is wrongfully & unjustly incarcerated.”

Alvi said the incumbent PTI chairman Gohar Khan was leading the party well. “I would like to put this inaccurate non-issue to rest with a clear denial,” he added.

Alvi’s meeting with Khan came a day after the ex-premier reportedly turned down the Pakistani military’s demand to apologize for the violent protests, allegedly staged by his supporters over his brief arrest in a graft case, that targeted military installations and public property on May 9, 2023.

Hundreds were arrested in the aftermath and some were tried by military courts after the authorities promised to bring the perpetrators and instigators of the violence to justice.

During the alleged crackdown against the PTI, Alvi, who was the then president, was said to be making efforts to bridge the gap between his party and Pakistan’s powerful military.

Khan was ousted in 2022 after falling out with Pakistan’s powerful military leaders who many say backed him into power in 2018. In opposition, he waged an unprecedented campaign of defiance against the military establishment which has directly ruled the South Asian nation for nearly half of its history.

Arguably Pakistan’s most popular politician, Khan says the cases against him are “politically motivated,” aimed at keeping him from returning to power. The military denies it.


Chinese-Pakistani firm SLM Tyres to invest Rs300 billion in Pakistan

Updated 11 May 2024
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Chinese-Pakistani firm SLM Tyres to invest Rs300 billion in Pakistan

  • The development came during SLM Tyres Chairman Jin Yongsheng’s meeting with PM Shehbaz Sharif in Lahore
  • Jin lauded the government’s investment-friendly policies and appreciated the measures to prevent smuggling

LAHORE: Service Long March (SLM) Tyres, a Chinese-Pakistani joint venture, has decided to invest an additional Rs300 billion in Pakistan that will help create new job opportunities and increase its exports, Pakistani state media reported on Friday.

The development came during Service Long March Tyres Chairman Jin Yongsheng’s meeting with Prime Minister Shehbaz Sharif in the eastern city of Lahore.

SLM Tyres, a joint venture of Servis Group and Chaoyang Long March, is Pakistan’s first all-steel radial tire manufacturer for trucks and buses. It aims to provide “best value for money” tires to Asian and Western countries.

During the meeting, Jin lauded the Pakistani government’s investment-friendly policies and appreciated measures to prevent smuggling, the state-run APP news agency reported.

“Jin Yongsheng said that the new investment would help produce 1000 new jobs whereas the company’s exports from Pakistan might also reach $100 million annually by 2025,” the report read.

SLM ownership comprises 51 percent shareholding of Servis Group, 44 percent of Chaoyang Long March Co. Ltd. and 5 percent of Myco Corporation. The $300 million venture has been given the status of Sole Enterprise Special Economic Zone (SESEZ) by Pakistan.

Pakistan, which narrowly averted a default last year, thanks to $3 billion International Monetary Fund (IMF) bailout, is currently looking to attract foreign investment to support its fragile, $350 billion economy.

Over the last one year, the South Asian country has signed investment deals worth billions of dollars with friendly countries.

During Friday’s meeting, PM Sharif welcomed the decision of Service Long March Tyres Group to expand its operations in Pakistan, saying his government was taking measures on priority to boost investment in the country.

“A comprehensive framework was being shaped up to further facilitate the business community and the investors,” Sharif was quoted as saying.


More than 3,400 Pakistani Hajj pilgrims arrive in Madinah via 15 flights

Updated 11 May 2024
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More than 3,400 Pakistani Hajj pilgrims arrive in Madinah via 15 flights

  • Pakistan on Thursday launched its pre-Hajj flight operation which will continue till June 9
  • Out of all, seven flights were operated from Islamabad, Karachi under Makkah Route initiative

ISLAMABAD: More than 3,400 Pakistani Hajj pilgrims have arrived in Madinah via 15 flights during the first two days of the country’s pre-Hajj flight operation, Pakistani state media reported on Friday.

Out of these, seven flights were operated from Islamabad and Karachi under the Makkah Route project, an initiative of the Saudi government to streamline the immigration process for pilgrims.

Currently, only Islamabad and Karachi airports in Pakistan are functioning under the initiative to facilitate pilgrims during the Hajj days.

“Filled with excitement and devotion, the pilgrims, who have been preparing for this moment for years, stepped foot in the Prophet’s (SAW) city, marking the beginning of the Hajj season,” the state-run APP news agency reported.

“Approximately three million pilgrims from around the world, including 179,210 Pakistanis, will converge on the holy cities to perform the sacred Hajj.”

From the airport, the passengers were transported to residential buildings located in Markazia, some 20-minute away from the Prophet’s Mosque.

Hajj is one of the five pillars of Islam, and requires every adult Muslim to undertake the journey to the holy Islamic sites in Makkah at least once in their lifetime, if they are financially and physically able.

Pakistan has a Hajj quota of 179,210 pilgrims this year, according to the Pakistani religious affairs ministry. Of them, 63,805 pilgrims will be performing the pilgrimage under the government scheme, while the rest would be accommodated by private tour operators.

Pakistan began its pre-Hajj flight operation on May 9, which will continue till June 9. This year’s pilgrimage is expected to run from June 14 till June 19.


Pakistan signs contract with consulting giant McKinsey in push to digitize tax collection system 

Updated 11 May 2024
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Pakistan signs contract with consulting giant McKinsey in push to digitize tax collection system 

  • IMF-led structural reforms require Pakistan to raise tax to GDP ratio from around 9 percent to 13 percent-14 percent
  • Global lender wants Pakistan to broaden its existing tax base and improve tax administration

KARACHI: Pakistan signed an agreement with McKinsey and Company on Friday for the digitalization of its tax system, the finance ministry said, as the South Asian nation strives to deliver reforms amid talks with the International Monetary Fund for a new bailout loan.

Among reforms the IMF will likely push for a new package, like the last two packages, are strengthening public finances including through gradual fiscal consolidation, broadening the existing tax base, improving tax administration, and debt sustainability.

In a media brief in December 2023, Pakistan’s main tax collection agency, the Federal Board of Revenue (FBR), said the country had a “very narrow tax base” of around 5.2 million people in 2022, out of a population of 240 million people. The FBR said it plans to add 1.5 million new taxpayers to the existing base during the current fiscal year.

A high-level meeting was held at the FBR headquarters on Friday, following the signing of the contract with the global consulting firm, McKinsey and Company. The meeting was attended by officials from the ministry of finance, FBR, McKinsey and Karandaaz, a not-for-profit company promoting access to finance for small and medium sized enterprises and financial inclusion for individuals.

“The digitalization of the tax system is a pivotal step toward modernizing tax collection which will enhance transparency and revenue growth,” the finance division said in a statement.

“Digital transformation is a key priority for the government, and this collaboration [with McKinsey] underscores the government’s commitment to improving tax collection for promoting sustained economic growth. We look forward to seeing the positive impact of this initiative on Pakistan’s economy,” Finance Minister Muhammad Aurangzeb was quoted as saying in the statement. 

FBR Chairman Malik Amjed Zubair Tiwana said FBR was committed to enhancing revenue collection by leveraging technology to modernize its operations.

“This project [with McKinsey] is a significant step toward achieving FBR’s goals of transparency and efficiency to better serve the people of Pakistan,” Tiwana added. 

With a chronic balance of payment crisis, Pakistan needs $24 billion in payments for debt and interest servicing in the next fiscal year starting July 1 — three times more than its central bank’s foreign currency reserves.

The South Asian nation is seeking yet another long-term, larger IMF loan, with finance minister Aurangzeb saying Islamabad could secure a staff-level agreement on the new program by early July.

If successful, this would be the 25th IMF bailout for Pakistan.

The IMF-led structural reforms require Pakistan to raise its tax to GDP ratio, stop losses in state-owned enterprise and manage its energy sector losses which run into trillions of rupees. 

Pakistan’s finance ministry expects the economy to grow by 2.6 percent in the current fiscal year ending June, while average inflation is projected to stand at 24 percent, down from 29.2 percent in fiscal year 2023/2024.

Inflation soared to a record high of 38 percent last May but eased to 17.3 percent this April after staying above 20 percent for almost two years