ISLAMABAD: Pakistan’s plan to raise taxes in its 2024-25 budget and boost state revenues will help it win approval from the International Monetary Fund for a loan to stave off another economic meltdown, but could fuel public anger, a former finance official, experts and industrialists said.
The South Asian country has set a challenging tax revenue target of 13 trillion rupees ($47 billion) for the year starting July 1, a near-40 percent jump from the current year, and a sharp drop in its fiscal deficit to 5.9 percent of GDP from 7.4 percent for the current year.
Pakistan had to reduce its fiscal deficit as part of negotiations with the IMF, with which it is discussing a loan of $6-8 billion, as it seeks to avert a debt default for an economy growing at the slowest pace in the region.
“The budget is enough to get an IMF Programme, as long as ... the budget is passed in the way it is presented,” former finance minister Miftah Ismail said. But he said the revenue targets will be challenging, as will the growth target of 3.6 percent.
“The two cannot happen simultaneously,” said Ismail, who as then-finance minister successfully negotiated the revival of Pakistan’s last Extended Fund Facility (EFF) program in 2022.
Outside analysts largely concur.
Emerging Market Watch’s Metodi Tzanov believes the budget in its current form should be acceptable to the IMF.
“The government ticked almost all the right boxes to comply with IMF conditions, including withdrawal of tax exemptions, raising corporate tax for exporters, increasing the personal income tax rate, tightening the noose around non-filers, and hiking fuel tax,” he said.
But some said the IMF might baulk if it saw the tax target as unrealistic.
Finance Minister Muhammad Aurangzeb, who presented the budget for the first time, said he expected to seal a Staff-Level Agreement with the IMF in July.
The IMF did not immediately publicly comment on the budget and did not respond to questions sent by Reuters.
The big rise in the tax target is made up of a 48 percent increase in direct taxes and 35 percent hike in indirect taxes. Non-tax revenue, including petroleum levies, is seen increasing by a whopping 64 percent.
Taxes have notably been slapped on previously protected export-oriented sectors such as textiles, which consistently make up over half of Pakistan’s exports, and whose receipts keep a persistently high external account deficit in check.
The representative body for the sector, All Pakistan Textile Mills Association, called for a review of the budget, terming it “extremely regressive” and one that “threatens the collapse of the textile sector and its exports.”
It warned of “dire consequences for employment and external sector stability, as well as for overall economic and political stability and security.”
The Pakistan Business Council also called for budgetary measures to be reconsidered.
“The budget prioritizes securing another IMF EFF but lacks innovation for domestic economic growth,” said Musadaq Zulqarnain, director at the Pakistan Textile Council and chairman of Interloop, one of Pakistan’s largest textile manufacturers.
The coalition government of Prime Minister Shehbaz Sharif does not have the luxury of a parliamentary majority to help it pass the budget smoothly.
Sticking to the reform measures will require it to resist pushback from key economic sectors as well as a broader public already angry at the prospect of further price rises.
Sharif’s party had to convince its largest ally, the Pakistan Peoples Party (PPP), without whom it does not have a majority, to attend the budget session in parliamentary. PPP said it was not happy with some of the measures.
But analyst Yousaf Nazar, formerly of Citibank, believes the protestations are just political posturing. “(PPP) won’t rock the boat,” he said.
With few options in the short term to support Pakistan’s recent stability, an IMF program appears crucial.
Increasing the tax base in an economy where proper documentation is often lacking will require considerable time and effort. Pakistan’s undocumented parallel economy is huge and 44 percent of its nominal GDP does not contribute significantly toward direct tax revenue, according to the Tola Associates, a tax firm.
Traders and agriculturalists in particular, both politically influential, have resisted the government’s push to register themselves and document their sales.
“If the tax base is not going to increase, moving forward, the country’s tax revenues growth can drop further and it might end up as a dead weight loss to the economy,” Tola Associates said in a note.
“The real challenge is that of implementation,” said former central bank chief and Managing Director at Alvarez & Marsal Reza Baqir.
“For example, the budget targets an ambitious increase in the tax-to-GDP ratio. Many previous budgets have similarly targeted ambitious improvements. I would hope that the lessons from why those ambitions were not realized have been reflected in this budget.”
Pakistan’s tax-heavy budget likely to land IMF bailout, but stoke tensions
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Pakistan’s tax-heavy budget likely to land IMF bailout, but stoke tensions
- Coalition government of PM Sharif does not have the luxury of a parliamentary majority to help it pass the budget smoothly
- Pakistan has set challenging tax revenue target of $47 billion for the year starting July 1, near-40% jump from current year
Afghan officials meet Pakistani diplomats in Doha amid strained ties
- Afghan government spokesperson Zabiullah Mujahid describes meeting as “good,” hopes for positive relations
- Tensions escalated last week after Pakistan’s defense minister hinted Islamabad could take out militants in Afghanistan
ISLAMABAD: Afghanistan government spokesperson Zabihullah Mujahid and a Taliban delegation this week met Pakistani officials in Doha amid strained ties, describing the meeting as a “good” one and hoping for relations between the two countries to improve in the future.
Tensions between the neighbors escalated last week when Pakistan’s Defense Minister Khawaja Asif hinted Islamabad could carry out cross-border attacks into Afghanistan to take out militants. Afghanistan warned Pakistan against taking such a step, warning there would be “consequences.”
Pakistan blames the Taliban-led government for harboring militants on Afghan soil. Islamabad alleges that the Pakistani Taliban or Tehreek-e-Taliban Pakistan (TTP) launch attacks in Pakistan from sanctuaries in Afghanistan. Kabul has denied the allegations and said Pakistan’s security lapses are its internal responsibility.
Delegations from Pakistan and around 30 other countries this week began a third round of United Nations-sponsored talks on integrating Afghanistan into the international community. The Pakistani mission in Qatar, including Pakistan’s Special Representative on Afghanistan Asif Durrani, held a dinner for the Taliban delegation on the sidelines of the conference on Monday.
“We thank them for their hospitality and hope for good and constructive relations for both countries,” Mujahid wrote on social media platform X on Tuesday.
“We had dinner and a very good meeting with the special representative of Pakistan Mr. Asif Durrani and the ambassador and consuls of that Pakistan in Doha.”
Tensions between Pakistan and Afghanistan further escalated last year when Islamabad launched a deportation drive, after a spike in suicide bombings which the Pakistan government, without providing evidence, blamed on Afghan nationals.
Pakistan also says Afghans are involved in smuggling, militant violence and other crimes.
The world has wrestled with its approach to Afghanistan’s new rulers, the Taliban, who seized power in Kabul in August 2021 after an international coalition of US-led forces pulled out of the country.
The Taliban government has not been officially recognized by any country since it took power. The administration’s strict regulations, primarily against women’s right to education and work, have angered the UN and several foreign countries.
Governments, aid agencies and international organizations have slashed or massively scaled back funding for Afghanistan in response, complicating problems for a country already reeling from internal conflicts and a deepening economic crisis.
Pakistani government commission says 197 new ‘missing persons’ cases reported this year
- Balochistan government spokesperson says missing persons numbers are often exaggerated by families and rights activists
- Families of alleged victims of enforced disappearances say government underreporting figures, don’t have trust in official process
KARACHI: The Pakistan government’s Commission of Inquiry on Enforced Disappearances (COIOED) has logged 197 new cases of missing people this year, with families of alleged victims saying on Tuesday the low number reflected the people’s lack of trust in the process of reporting cases to authorities.
Enforced disappearances is an enduring issue in Pakistan where relatives, politicians and rights activists say many people who have gone missing, especially in Pakistan’s southwestern Balochistan province, have been abducted by Pakistani security forces on the pretext of fighting militancy. The Pakistani state denies involvement in enforced disappearances.
The COIOED was set up in 2011 to trace missing persons and hold individuals or organizations to account for their disappearance. In a report released on Monday, the commission said around 10,285 cases had been registered with the body since January 2018, of which 4,514 individuals had returned home, 1,002 were in internment centers, 671 in prisons, and the dead bodies of 277 had been recovered. Additionally, 1,551 cases were closed for various reasons.
The commission said 47 cases had been reported in June. Twenty-eight cases had been disposed of due to people returning home, being in internment camps or jails, being found to be dead or determined to not be cases of enforced disappearances.
The report said less than 30 percent of the total cases received by the commission over the last seven years were from Balochistan, and that 2,360 cases, or 84.52 percent of the total 2,792 registered cases from Balochistan, had been resolved. Among these, 2,025 people had returned home.
But many relatives of alleged victims dismiss the figures.
Rights activist Sammi Deen Baloch, who has been advocating for the recovery of her father Dr. Deen Mohammad Baloch since 2011, said she had stopped pursuing the case in 2021 after losing faith in the body.
“I stopped pursuing my father’s case in 2021 because commission members were rude to families, despite their duty being to provide relief,” Baloch, who is also the general secretary of the Voice of Baloch Missing Persons (VBMP) group, told Arab News.
Baloch said the low number of reported cases from Balochistan indicated that either people were not coming forward or they were publicly showing their lack of trust in the government commission.
She also said it was particularly challenging to document all cases from Balochistan because families often preferred to keep their identities hidden, and because the province, Pakistan’s largest by size, covered a vast and remote area.
Monday’s report said the northwestern Khyber Pakhtunkhwa province had the highest number of registered cases since the commission was set up, totaling 3,537 or 34.38 percent. Sindh’s registered cases are 1,823, accounting for 17.72 percent of the total, followed by Punjab with 1,675 cases, or 16.28 percent.
Amina Masood Janjua, who has been campaigning for the recovery of her husband Ahmad Masood Janjua since 2005 and is the chairperson of the Defense of Human Rights group, a network of families of missing persons, noted that KP saw a lot of cases of enforced disappearances during former military ruler Musharraf’s tenure.
“Another reason is also that it is a border area and a physical War on Terror has been fought in this region,” Janjua said.
Pakistan’s capital, Islamabad, had 378 cases, 3.67 percent of the total registered while Azad Kashmir had 70 cases, or 0.68 percent of the total. Pakistan’s northern semi-autonomous Gilgit-Baltistan region reported only 10 cases of missing persons.
‘EXAGGERATED’
According to the commission’s data, 1,096 cases were registered from across Pakistan in 2018, followed by 800 in 2019. The next year, the figure dropped to 415 but surged to 1,460 in 2021.
This increased to 860 in 2022 while in 2023, 885 cases of missing persons were registered across the country. This year, only 197 cases were reported across the country during the first six months.
Janjua agreed that a “lack of trust” in the commission was the main reason for the low number of cases that were logged, particularly from Balochistan, where there is a disconnect between the public and the state and people widely believe the mineral-rich province’s resources are being exploited by the government, a charge it denies.
The province has also been home to a low-level insurgency by separatist militants for decades.
Shahid Rind, a Balochistan government spokesperson, acknowledged that the missing persons issue was “real” but said figures reported by families and rights groups were “often exaggerated.”
“Different leaders claim figures in the thousands, which lacks substantiation,” Rind told Arab News.
“The state requires specific data and documentation to confirm disappearances, and there is an established mechanism for this purpose,” he explained.
Former Pakistani senator Afrasiab Khattak, who has long championed the cause for missing people, disagreed, saying that the number of missing persons was much higher than that reported by the commission. He said given a lack of trust in the commission, families thus preferred to hold protests and sit-ins to register their grievances.
“They hope mobilizing public opinion may give some results than waiting for the decisions of these already failed forums,” Khattak said.
Dozens rally in Pakistan after Christian man is sentenced to death for blasphemy
- Pakistani court sentenced Christian man to death this week for sharing “hateful content” against Muslims
- Often mere blasphemy accusations can cause riots and incite mobs to violence, lynchings in Pakistan
KARACHI, Pakistan: Dozens of members from Pakistan’s civil society rallied on Tuesday in the southern port city of Karachi against the death sentence handed down to a Christian man on blasphemy charges, nearly a year after one of the worst mob attacks on Christians in the country.
Several Christians also joined the rally which comes a day after a court in Sahiwal in the Punjab province announced the death sentence to Ehsan Shan after finding him guilty of sharing “hateful content” against Muslims on social media.
Shan’s lawyer Khurram Shahzad said on Monday he will appeal the verdict.
He was arrested in August 2023 after groups of Muslim men burned dozens of homes and churches in the city of Jaranwala in Punjab after some residents claimed they saw two Christian men desecrating pages from Islam’s holy book, the Qur’an.
The two men were later arrested.
Though Shan was not party to the desecration, he was accused of reposting the defaced pages of the Qur’an on his TikTok account.
At Tuesday’s rally in Karachi, a Christian leader Luke Victor, called for Shah’s release.
He also demanded action against those who were involved in burning churches and homes of Christians in Jaranwala.
Blasphemy accusations are common in Pakistan. Under the country’s blasphemy laws, anyone found guilty of insulting Islam or Islamic religious figures can be sentenced to death.
While authorities have yet to carry out a death sentence for blasphemy, often a mere accusation can cause riots and incite mobs to violence, lynching and killings.
PM Sharif highlights Pakistan’s ‘unlimited potential’ for investment during Tajikistan visit
- Sharif will attend twin summits of Shanghai Cooperation Organization in Kazakhstan later
- Visit comes as Islamabad seeks to enhance role as trade hub connecting Central Asia with world
ISLAMABAD: Prime Minister Shehbaz Sharif on Tuesday highlighted the “unlimited potential” for foreign investment in Pakistan’s key economic sectors, a statement from his office said, during his visit to Tajikistan to enhance Islamabad’s regional ties with Central Asian states.
Sharif reached Dushanbe on an official visit to Tajikistan on Tuesday which will be followed by a trip to Kazakhstan for the twin summits of the Shanghai Cooperation Organization (SCO). The Pakistani prime minister received a guard of honor upon his arrival, where he was welcomed by Tajikistan Prime Minister Aziz M. Qohir Rasulzoda and other government officials.
His visit comes as Pakistan pushes to enhance its role as a pivotal trade and transit hub connecting the landlocked Central Asian states with the rest of the world, leveraging its strategic geographical position.
In recent weeks, there has been a flurry of visits, investment talks and economic activity between Pakistan and Central Asian states. Last week, Sharif chaired a special meeting attended by senior government ministers on how to enhance relations with the region, particularly in the areas of economy and investment.
“There is unlimited potential for international investment in Pakistan in energy, minerals, industry, agriculture, and other sectors,” the Prime Minister’s Office (PMO) quoted the prime minister as saying during his meeting with the Tajikistan President Emomali Rahmon.
Sharif also extended an invitation to President Rahman to enhance regional ties and expand social relations between Pakistani and Tajikistan.
The Tajik president stressed on the importance of longstanding fraternal relations between Pakistan and Tajikistan, the PMO said.
In a post on social media platform X, Sharif thanked his Tajik counterpart for the warm welcome he received upon his arrival.
He vowed to take Pakistan-Tajikistan ties to newer heights by expanding the scale of cooperation between the countries.
Sharif also visited the memorial of Tajikistan’s national hero, Ismail Samani, during his visit.
In May, Pakistan’s investment minister reaffirmed the country’s resolve to cooperate with Central Asian states as Islamabad pushes forward an ambitious agenda to bolster trade activities while grappling with a macroeconomic crisis.
On Monday, Sharif also received the Ambassador of Kazakhstan to Pakistan, Yerzhan Kistafin, at his office in Islamabad. During the meeting, Sharif emphasized the “need to enhance trade and investment, while also focusing on regional connectivity and security.”
Pakistani court grants bail to ex-PM Khan’s wife in land graft case— lawyer
- Former premier, wife charged with receiving land worth millions of dollars as bribe from real estate tycoon
- Despite bail, ex-PM Khan’s wife Bushra Wattoo will remain in prison due to her conviction in another case
ISLAMABAD: An accountability court in Pakistan’s Rawalpindi city on Tuesday granted pre-arrest bail to former prime minister Imran Khan’s wife in a corruption case, his lawyer confirmed, saying that no evidence had been found she had gained financial benefit from a trust.
Government officials allege Khan, 71, and his third wife Bushra Wattoo received land worth millions of dollars as a bribe from a real estate tycoon Malik Riaz Hussain through the Al-Qadir Trust, a non-governmental welfare organization set up by Wattoo and Khan in 2018 when he was still in office.
The trust runs a university outside Islamabad devoted to spirituality and Islamic teachings, a project inspired by the former first lady, who is also commonly known as Bushra Bibi and has a reputation as a spiritual healer.
“NAB court confirmed pre-arrest bail of Bushra Bibi today in Al Qadir Trust 190 million pounds case,” Barrister Salman Safdar, Khan’s lawyer, wrote on social media platform X.
“There was no evidence of financial gain; benefitting in any manner from the trust.”
Khan was briefly arrested on May 9 in connection with the case, with riots breaking out throughout the country that saw military and government installations attacked. The former prime minister was released shortly but was arrested in August in a separate case related to the sale of state gifts illegally.
The National Accountability Bureau (NAB), Pakistan’s corruption watchdog, filed a reference against Khan in December 2023 in the case. In February this year, the former prime minister and Wattoo were indicted by an accountability court.
Despite the bail, however, Wattoo will stay in prison as she is also serving a sentence in another case, where a trial court declared her marriage to Khan in 2018 as unlawful.
Local media reports said the prosecution presented three more witnesses in court during Tuesday’s hearing in the case, who were cross-examined by defense lawyers. The court summoned other witnesses in the next hearing, which was adjourned till July 5.
Khan, who is the founder of the Pakistan Tehreek-e-Insaf (PTI) party, has been in jail since last August and was convicted in some cases ahead of a national election in February. He is also fighting dozens of other cases which are continuing. Khan and his party say the charges were politically motivated to thwart his return to power.
In recent months, Pakistani courts have suspended Khan’s jail sentences in two cases about the illegal acquisition and sale of state gifts and also overturned his conviction on charges of leaking state secrets.
However, he has remained in prison due to the unlawful marriage case conviction. Khan also faces a trial under anti-terrorism charges in connection with the May 9 violence.
With input from Reuters
