Government to table bill in parliament today seeking additional taxes to meet IMF terms

Pakistan’s Finance Minister Ishaq Dar (R) speaks during a press conference in Islamabad on February 10, 2023. (Photo courtesy: AFP)
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Updated 14 February 2023
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Government to table bill in parliament today seeking additional taxes to meet IMF terms

  • Development comes after president advises government to levy additional taxes through parliament
  • Economists say the IMF is moving ahead cautiously as it remains skeptical of Islamabad’s promises

ISLAMABAD: The Pakistani government has announced it would table a finance bill in parliament on Wednesday, aimed at levying additional taxes worth $636 million for the revival of the $7 billion International Monetary Fund (IMF) loan program.

The development came hours after President Arif Alvi advised the government to enact a law through parliament for the collection of additional taxes to meet the IMF requirements.

The South Asian nation of 220 million is making frantic attempts to complete all prior actions suggested by the global lender to reach a staff-level-agreement for the disbursement of a $1.2 billion tranche as part of its bailout program secured in 2019.

“The finance bill will be submitted in the parliament tomorrow which has been summoned,” the Pakistani finance ministry said late Tuesday.

Earlier in the day, Finance Minister Ishaq Dar called on President Alvi and “apprised him about the progress in talks with the International Monetary Fund and that all modalities have been agreed upon,” according to a finance ministry statement.

The minister informed the president that the government wanted to raise additional revenue through taxes by promulgating an ordinance, but the president suggested him to do it through an act of parliament.

“The President advised that it would be more appropriate to take the Parliament into confidence on this important subject, and that a session be called immediately so that the bill is enacted without delay,” the finance ministry said.

“The president appreciated the efforts of the government for negotiating an agreement with the IMF and assured that the state of Pakistan would stand by the commitments made by the government with the IMF.”

The finance minister has already announced imposing new taxes of around Rs170 billion ($636 million) to fulfil one of the demands of the IMF to revive the program, which has been stalled since November.

The government can impose the additional taxes either through an act of parliament or through a presidential ordinance, which would remain valid for 120 days.

The government has already jacked up electricity and gas tariffs for all domestic and commercial consumers effective from January 1 till June 30 to meet the IMF conditions.

Finance ministry officials also shared this data with the IMF during virtual talks between the two sides on Monday.

An IMF delegation also visited Islamabad from January 31 till February 9 to negotiate the revival of the bailout program, but left the country without signing the agreement.

The lender has agreed to continue talks virtually while the government would implement all the prior actions mentioned in the memorandum of economic and financial policies (MEFP) to receive the $1.2 billion tranche after completion of the 9th review of the program.

Meanwhile, Fitch Ratings on Tuesday cut Pakistan’s rating by two notches to CCC- from CCC+, the fourth lowest score. The agency downgraded Pakistan’s rating for the second time in four months after the country’s foreign exchange reserves dropped to critically low levels amid a delay in its IMF bailout.

Economists say the government must firm up all fiscal and monetary actions as quickly as possible to stave off a balance-of-payment crisis as the country’s foreign exchange reserves have dwindled to a staggering $2.9 billion, barely enough to provide three-week cover for imports.

“The IMF is moving ahead cautiously as there is a serious credibility issue of the government if it will be able to implement all the actions in true spirit after disbursement of the tranche,” Dr. Salman Shah, a former economic adviser to the government, told Arab News.


Saudi Arabia, UAE invest $26.8 million in Pakistan in first quarter of current fiscal year

Updated 9 sec ago
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Saudi Arabia, UAE invest $26.8 million in Pakistan in first quarter of current fiscal year

  • Foreign investment surged by 48 percent in first quarter of current fiscal year
  • Pakistan, Saudi Arabia signed agreements worth $2.8 billion last month

ISLAMABAD: Pakistan’s foreign investment has surged by 48 percent during the first quarter of the current fiscal year, state-run media reported on Tuesday, with Saudi Arabia and the United Arab Emirates (UAE) contributing $26.8 million during the same period.

Pakistan formed the Special Investment Facilitation Council (SIFC), a hybrid civil and military body, in 2023 to fast-track decisions related to foreign investment in its key economic sectors such as agriculture, mining, minerals, tourism and others. The development took place as Pakistan grappled with a prolonged economic crisis that almost led the country to suffer a sovereign default before a critical $3 billion bailout by the International Monetary Fund (IMF) last year averted the crisis.

As per a breakdown shared by state broadcaster Radio Pakistan, China invested $404 million during the first quarter of the current fiscal year while Saudi Arabia’s investment was recorded at $ 1.8 million. The UAE, meanwhile, invested $25 million, Hong Kong $98 million, the United Kingdom $72 million and the United States $28 million in the same period, the state broadcaster said.

“A significant increase of forty eight percent has been seen in foreign investment in Pakistan in the first quarter of current fiscal year, reflecting the effective strategies of the Special Investment Facilitation Council,” Radio Pakistan said.

Pakistan’s Prime Minister Shehbaz Sharif visited Saudi Arabia and Qatar last week, where he held talks with the leadership of the two countries on enhancing cooperation in trade, investment and energy. Pakistani and Saudi businesses had signed 27 agreements and memorandums of understanding (MoUs) worth $2.2 billion in October. During Sharif’s visit to the kingdom last week, the two countries agreed to enhance that figure to $2.8 billion.

Meanwhile, the UAE is Pakistan’s third-largest trading partner after China and the United States. It is also an ideal export destination for the South Asian nation as the short distance between the two countries limits transportation costs and facilitates commercial exchanges.

Sharif has actively pursued economic diplomacy in the region in recent months, seeking more investments and enhancing trade and regional connectivity for Pakistan. The South Asian country has sought to leverage its position as a transit and trade hub connecting landlocked Central Asian countries with the rest of the world and also pushed for mutually beneficial economic partnerships with Gulf countries.


Security guard shoots and injures two Chinese nationals at Karachi factory — police

Updated 11 min 35 sec ago
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Security guard shoots and injures two Chinese nationals at Karachi factory — police

  • Incident follows two Chinese nationals killed in suicide bombing in Karachi last month
  • Beijing has recently publicly spoken out about security threats to its nationals in Pakistan

KARACHI: A security guard at a factory in the southern Pakistani city of Karachi shot and injured two Chinese nationals on Tuesday, police said, in an incident that is likely to put further strain on recently fraying relations between Islamabad and longtime ally Beijing.

China, breaking with tradition, has recently publicly spoken out against security threats to its workers and nationals living in Pakistan, where hundreds of them work on Beijing-funded projects linked to the over $60 billion China-Pakistan Economic Corridor (CPEC). 

Last month, two Chinese nationals were killed in a suicide bombing near the international airport in Karachi. In March this year, a suicide bombing killed five Chinese engineers and a Pakistani driver in northwestern Pakistan as they headed to the Dasu Dam, the biggest hydropower project in the country. In 2022, three Chinese educators and their Pakistani driver were killed when an explosion ripped through a van at the University of Karachi. A blast on a bus killed 13 people in north Pakistan in 2021, including nine Chinese nationals.

The latest shooting took place at a factory in Karachi’s SITE industrial area, after which two injured Chinese citizens were rushed to Liaquat National Hospital.

Deputy Inspector General of Police South, Syed Asad Raza, said the factory guard opened fire at the Chinese nationals after an argument. He did not name the factory, specify whether the Chinese nationals were employees there or what the argument was about. 

“According to preliminary investigation, the guard opened fire after a heated argument with the Chinese nationals, leaving two Chinese citizens injured,” Raza told Arab News. 

“Two Chinese nationals have been brought to hospital. Both are under treatment,” Dr. Amjad Rizvi, a hospital spokesman, told Arab News. 

Sindh Home Minister Zia ul Haq Lanjar has directed police to conduct a “thorough investigation,” his office said. 

Pakistan said in a joint statement last month it had agreed to increase security for Chinese citizens and projects in the South Asian nation, as Beijing called for urgent security measures following an escalation in militant threats in the country.

China has pumped billions of dollars into Pakistan over the years building infrastructure under the Belt and Road Initiative, while also running a strategic port and a major mine in the country.


Toxic smog wreathes India’s capital, Pakistan’s Lahore as winter nears

Updated 05 November 2024
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Toxic smog wreathes India’s capital, Pakistan’s Lahore as winter nears

  • Punjab government has blamed pollution wafting in from India for Lahore’s worsening air quality 
  • Authorities in Punjab have taken emergency measures in wake of unprecedented pollution levels

NEW DELHI: A toxic smog shrouded the Indian capital on Tuesday, driving air quality in some areas into the “severe” range ahead of winter, when cold air traps pollutants and brings a spike in respiratory illnesses.

The mix of smoke, emissions, and dust is an annual problem for authorities in New Delhi, with vehicles, construction dust, and smoke from farm fires in the adjoining northern states of Punjab and Haryana among the major contributors.

“The outlook for the subsequent six days: the air quality is likely to be in the ‘very poor’ to ‘severe’ category,” said the earth sciences ministry.

The city’s overall score on an air quality index kept by India’s top pollution authorities was ‘very poor’ at 384, the ministry added, and was likely to stay there until Thursday.

An index range of 401 to 500 falls into the ‘severe’ category, implying it affects healthy people, but is more serious for those already fighting disease.

Ministry data showed farm fires have increasingly swelled the pollution over the last three days, for a share of more than 23 percent on Monday, from about 15 percent on Saturday.

About a third of the city’s 39 monitoring stations showed a ‘severe’ score of more than 400 on Tuesday, said the Central Pollution Control Board (CPCB), well short of an air quality score of zero to 50 that it rates as ‘good’.

Swiss group IQAir also rated Delhi the world’s second most polluted city on Tuesday, after Lahore in neighboring Pakistan, where authorities also took emergency measures in the wake of Sunday’s unprecedented pollution levels.

The government in the eastern province of Punjab, home to Lahore, has blamed deteriorating air quality on pollution wafting in from India, an issue it has vowed to take up with its neighbor through the foreign ministry.


Pakistan, Uzbekistan businesses explore joint ventures in Tashkent meeting

Updated 05 November 2024
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Pakistan, Uzbekistan businesses explore joint ventures in Tashkent meeting

  • The business-to-business meetings spanned a variety of industries, including textiles, food processing, engineering and logistics
  • Pakistan is seeking to promote closer economic ties with regional and international allies to bolster its fragile $350 billion economy

ISLAMABAD: Representatives of more than two dozen Pakistani companies and over one hundred leading Uzbek enterprises met in Tashkent and discussed joint projects in diverse sectors, the Pakistani commerce ministry said on Monday.

The discussions took place at the Uzbek-Pakistani Business Forum, complementing the 9th intergovernmental commission meeting on economic cooperation between Uzbekistan and Pakistan, according to the Pakistani ministry.

These business-to-business (B2B) meetings spanned a variety of industries, including textiles, food processing, engineering and logistics, underscoring the shared commitment of both nations to explore collaborative business opportunities.

Addressing the forum, Pakistan’s Commerce Minister Jam Kamal Khan highlighted Pakistan’s investment-friendly environment and encouraged Uzbek businesses to consider collaborative projects in Pakistan.

"He emphasized that such interactions pave the way for deepened commercial ties and contribute to regional economic stability," the commerce ministry said.

Uzbekistan’s Minister of Investment, Industry and Trade Laziz Kudratov echoed these sentiments, welcoming Pakistani enterprises and emphasizing the Uzbek government’s commitment to fostering a supportive atmosphere for international partnerships.

"Initiatives like the Business Forum play a crucial role in propelling trade and investment forward, creating new opportunities for entrepreneurs," he was quoted as saying.

The development comes as Pakistan seeks to enhance regional connectivity with landlocked Central Asian states by providing them access to its warm water ports. It recently offered Central Asian states to become part of the China-Pakistan Economic Corridor project, under which Beijing has pledged around $65 billion in energy, infrastructure and other projects in Pakistan.

The South Asian country narrowly avoided a sovereign default last year and has since sought to promote closer economic ties with regional and international allies to bolster its fragile $350 billion economy, which has been suffering from a prolonged macroeconomic crisis.


Iranian FM arrives in Pakistan to discuss Middle East situation, bilateral ties

Updated 05 November 2024
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Iranian FM arrives in Pakistan to discuss Middle East situation, bilateral ties

  • Seyed Abbas Araghchi’s visit takes place amid surging regional tensions between Israel and Iran
  • Islamabad, Tehran have had a rocky relationship despite agreements on trade, energy and security 

ISLAMABAD: Iran’s Foreign Minister Seyed Abbas Araghchi has arrived in Islamabad on a two-day official visit to hold consultations with the Pakistani leadership on the evolving Middle East situation and discuss bilateral ties with Pakistan, state-run media reported on Tuesday. 

Araghchi was welcomed by Pakistan’s Additional Foreign Secretary (Afghanistan and West Asia) Ambassador Ahmed Naseem Warraich upon his arrival in Islamabad, a foreign office press release said. 

Araghchi’s Islamabad visit takes place after last month’s escalation in hostilities between Iran and Israel, with both countries firing missiles at each other. Israel carried out strikes against Iran on Oct. 26, saying it was responding to missile attacks conducted by Tehran earlier in the month.

Since the deadliest attack in its history on Oct. 7, 2023, Israel has been fighting Hamas in Gaza and since late September, it has been at war with Hezbollah in Lebanon. Both Hezbollah and Hamas are allies of Iran. Pakistan, a major ally of Saudi Arabia, shares a long border with Iran.

“Iranian Foreign Minister Seyed Abbas Araghchi arrived here late Monday night on a two-day official visit to hold consultations with Pakistan’s leadership on the situation in the Middle East and bilateral relations,” state-run Associated Press of Pakistan (APP) reported. 

The APP said Araghchi will meet Prime Minister Shehbaz Sharif and Deputy Prime Minister and Foreign Minister Ishaq Dar during his two-day visit. 

“This visit provides an important opportunity to advance cooperation and dialogue between Pakistan and Iran on a wide range of areas including trade, energy and security,” APP said. 
Pakistan and Iran have had a rocky relationship despite several commercial pacts between the two countries on trade, energy and security. Both countries signed the $7 billion Iran-Pakistan gas pipeline project agreement in 2004 but 20 years on, the project remains incomplete. Tehran has completed the pipeline’s construction on its side of the border while Pakistan is seeking a US waiver to go ahead with it due to international sanctions targeting Tehran. 
Pakistan and Iran are also often at odds over instability on their shared porous border, with both countries routinely trading blame for not rooting out militancy.
Tensions surged in January when Pakistan and Iran exchanged airstrikes, both claiming to target alleged militant hideouts in each other’s countries. Late Iranian president Ebrahim Raisi visited Pakistan in April on a three-day visit aimed at strengthening bilateral relations and easing tensions. The two sides also signed memorandums of understanding in the fields of trade, science technology, agriculture, health, culture, and judicial matters.