ISLAMABAD: On Wednesday, Finance Minister Asad Umar is currently presenting the ‘mini-budget’ in the National Assembly.
The mini budget by the Pakistan Tehreek-e-Insaf (PTI) federal government comes amid protest staged by opposition parties in the NA.
Umar began by stating that this was not a mini-budget being presented but rather a set of economic reforms.
Before the mini-budget presentation by the finance minister, opposition leader and president of Pakistan Muslim League (Nawaz) Shehbaz Sharif took a jibe over the government on Sahiwal killings.
“The chief minister of Punjab cannot even respond to the nation’s call without the prime minister’s permission,” said Sharif, adding that the chief minister would not act without seeking permission on Whatsapp from the prime minister.
The PML-N president also called for the resignation of the prime minister followed by that of Punjab Chief Minister Usman Buzdar.
Foreign Minister Shah Mehmood Qureshi suddenly rebutted the ex-CM Punjab, stating the government had not only condemned the Sahiwal incident, but the prime minister had issued directives to the chief minister Punjab.
“What was said about the elected chief minister was not appropriate,” Qureshi asserted.
Qureshi said the prime minister directed that a report on Sahiwal should be presented within 72 hours. “The JIT within the time frame came to the conclusion that the Khalil family was innocent.”
“Unlike the past governments, this government did not try to suppress the facts,” the minister added.
Qureshi requested that this incident should not be used for political point scoring.
What to expect from the mini-budget
Measures are expected to include higher taxes on luxury items, mobile phones, and large cars as well as cuts in import duty for some machinery and raw materials imports to try to boost local industry and help exporters.
But the main thrust of the package will be on creating better conditions for investment in an economy struggling from severe pressure on its public finances and facing a balance of payments crisis with foreign exchange reserves sufficient to cover less than two months of imports.
“This is not just about taxation measures, it is about encouraging investment, whether in the stock exchange, industry, financial sector or other,” said Khaqan Hassan Najeeb, a senior adviser at the finance ministry.
With economic growth expected to slow this year to 4 percent, from 5.8 per cent in 2018, a yawning current account deficit, and a fiscal deficit set to hit 6.9 per cent of gross domestic product in 2019, according to IMF estimates, Pakistan needs to get control of its public finances.
“On the fiscal side, there’s more to be done. They really need to find ways to bring the fiscal deficit down,” said Raza Jafri, executive director of research at Intermarket Securities.
Since coming to power in August, much of the government’s focus has been in staving off a balance of payments crisis and it has opened talks with the International Monetary Fund, although there has been no agreement so far on the terms of what would be Pakistan’s 13th IMF bailout since the 1980s.
Umar, who was quoted earlier this month as saying there was no immediate need for an IMF package, arrived in Pakistan on Tuesday from a visit to Qatar with Prime Minister Imran Khan.
The visit was aimed at securing agreement to cut the price of liquefied natural gas from Qatar and secure a credit facility to defer payments on gas imports, part of a broader drive to secure financing from sources other than the IMF.
An accord with Qatar would follow similar arrangements with Saudi Arabia and the United Arab Emirates (UAE), which have offered deals to defer payment for oil imports in addition to billions of dollars in loans.
High imports of capital goods, many related to the China Pakistan Economic Corridor (CPEC) development project — part of China’s mammoth Belt and Road Initiative — as well as strong demand for consumer goods and energy costs have driven a wider current account deficit.
But despite a sharp devaluation of the Pakistani rupee, which has lost about 25 percent of its value over the past year, and a steep drop in oil prices over the past three months, exports have been slow to pick up.
49 per cent tax on small and medium enterprises reduced to 20pc.
Withholding tax on bank transactions waived off for tax filers.
Non-filers will be able to purchase small and mid-size cars up to 1300CC, but the tax would be increased.
Duty on import of newsprint eliminated.
No tax on bids for sports franchises until profitability.
Tax will be increased for vehicles over 1800CC.
Continuation of 1pc per annum reduction in corporate income tax.
Super tax on non-banking companies to be abolished from July 1, 2019.