December 30, 2021 (MLN): The Cabinet’s decision to defer the approval of the mini-budget is likely to delay the much-needed go-ahead from the board of the International Monetary Fund (IMF) due in January 2022.
Earlier, in its mission concluding statements, the IMF had said that Pakistan and fund officials had have reached a staff-level agreement on policies and reforms needed to complete the sixth review under the Extended Fund Facility (EFF).
However, as per the reports, the Fund had asked the government to withdraw sales tax exemptions and ensure the autonomy of the State Bank of Pakistan (SBP) from the parliament.
Although the Cabinet has already passed the proposed amendments to the SBP Act 1956, it is facing a tough task to pass through the proposed withdrawal of sales tax exemptions through the parliament as the members are unwilling to agree to the proposed changes as they fear it will unleash a wave of inflation.
The government is facing stiff resistance on the mini-budget from the opposition parties as well as some members within the party as they fear the move will increase the inflationary pressures on the masses.
Information Minister Fawad Chaudhary has said that as per law, once the cabinet approves the budget, it must be transmitted to the National Assembly without delay. Since there was no NA session, it was deferred, he said while speaking to a local newspaper.
However, Chaudhary further told the scribe that a special cabinet meeting session is likely to be called on Thursday which will approve the bill and immediately after that, the same will be presented before the parliament.
The country’s currency as well as capital markets have been jittery throughout the last few months awaiting the Fund’s approval before normalizing.
