Budget 2024-25 sails through the National Assembly amidst optimism about IMF loan deal

ISLAMABAD, June 28 (SABAH): The National Assembly on Friday passed the government’s tax-heavy finance bill for the coming fiscal year ahead of more talks on a new International Monetary Fund (IMF) bailout as it seeks to avert a debt default for an economy growing at the slowest pace in South Asia. 

The government presented the tax-loaded budget two weeks ago, drawing sharp criticism from opposition parties, especially the PTI, as well as coalition ally PPP. Finance Minister Muhammad Aurangzeb had moved the finance bill in the NA, which was endorsed by Prime Minister Shehbaz Sharif. 

Opposition parties, mainly parliamentarians backed by currently incarcerated former premier Imran Khan, have rejected the budget, saying it will be highly inflationary. On Tuesday, the PPP – which had initially boycotted the debate over the budget – decided that it would vote for the finance bill despite certain reservations.

While giving a press briefing after a party meeting, PPP leader Naveed Qamar said the meeting decided that if the party did not vote for the budget, “it would amount to dismantling the government and paving the way for instability in the country”.The government now has numbers and this budget will go through, Qamar asserted.

Besides the PPP, members of the Muttahida Qaumi Movement-Pakistan (MQM-P), another ruling coalition partner, has also expressed concern over the government’s move to impose taxes on the salaried and middle-class people, stating that the budget would cause more inflation in the country. NA Speaker Sardar Ayaz Sadiq announced the passage of the bill in a live TV telecast on Friday.

Policymakers have set a challenging tax revenue target of Rs13,000 billion for the fiscal year starting July 1, up about 40 per cent from the current year, in the national budget presented on July 12 that looked to strengthen the case for a new rescue deal with the IMF.

Pakistan is in talks with the IMF for a loan of $6 billion to $8bn. The rise in the tax target is made up of a 48pc increase in direct taxes and a 35pc hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by a whopping 64pc.

The tax would increase to 18pc on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate. The government has projected a sharp drop in its fiscal deficit for the new financial year to 5.9pc of GDP, from an upwardly revised estimate of 7.4pc for the current year.

The central bank has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes. The upcoming year’s growth target has been set at 3.6pc with inflation projected at 12pc.

Meanwhile, the National Assembly debated the budget for approval and rejected all the amendments suggested by the opposition. The PPP, in the meanwhile, withdrew its demand for reduction in the petroleum development levy (PDL).

The opposition demanded a vote against the increase in the PDL and its resolution was rejected by 170-84. However, the finance minister himself withdrew increase in the PDL. PTI Chairman Barrister Gohar Ali Khan and former Speaker Asad Qaiser raised the issue of cut in funding of projects in Khyber Pakhtunkhwa.

Sunni Ittehad Council member Junaid Akbar Khan said that Prime Minister Shehbaz has said that he had been in jail like the PTI founder.

He addressed the premier and said when his party would come into power, it would pay them back along with interest. Be mindful of what you have done with our women workers, he warned the PM.

Prime Minister Shehbaz Sharif, PPP Chairman Bilawal Bhutto Zardari and Aseefa Bhutto Zardari also attended the assembly session.