IMF criticizes Pakistan’s new budget for failing to broaden tax net in ‘progressive way’

The seal of the International Monetary Fund is seen at the headquarters building in Washington, DC on July 5, 2015. (AFP/File)
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Updated 15 June 2023
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IMF criticizes Pakistan’s new budget for failing to broaden tax net in ‘progressive way’

  • Top IMF official in the country says the fiscal plan has further reduced the fairness of the country’s tax system
  • The Fund also criticizes a proposed tax amnesty scheme, says it runs against conditionalities laid out by it

KARACHI: The International Monetary Fund (IMF) said on Thursday Pakistan missed the opportunity to expand its tax base in a progressive manner in the new federal budget while pointing out that the proposal of a new amnesty scheme was against the conditions mentioned in a $6.5 billion loan program signed in 2019.

Pakistan’s finance minister, Ishaq Dar, presented the budget for the next fiscal year with an outlay of Rs14.46 trillion ($50.4 billion) on Friday. The government targeted a 6.5 percent fiscal deficit and allocated around 50 percent of the amount to make interest payments.

The IMF and the Pakistani authorities have been negotiating with each other since last November to complete the ninth review of the loan program. However, they have not managed to make headway in ensuring the revival of the facility which is set to expire at the end of June.

The IMF country representative expressed reservations over the country’s new federal budget while commenting on its various components on Thursday.

“The draft FY24 Budget misses an opportunity to broaden the tax base in a more progressive way,” Esther Perez Ruiz told Arab News in response to a query about whether Pakistan’s new fiscal plan was in line with the IMF objectives.

“The long list of new tax expenditures reduces further the fairness of the tax system and undercuts the resources needed for greater support for vulnerable BISP [Benazir Income Support Program] recipients and development spending.”

The finance minister announced on Friday an enhancement of the BISP allocation by Rs50 billion to Rs450 billion. He informed that 9,300,000 families would receive a cash transfer facility of Rs8,750 per quarter under the program, for which Rs346 billion had been allocated.

He added the government would also increase the cash transfer rate to match inflation.

The IMF criticized the tax amnesty proposed by the federal finance minister, which allows people to bring up to $100,000 from abroad without declaring their sources of earning, through an amendment in the income tax ordinance.

“The new tax amnesty runs against program’s conditionality and governance agenda and creates a damaging precedent,” the IMF representative continued.

“Measures to address the energy sector’s liquidity pressures could be included alongside the broader budget strategy,” she added.

Despite all these reservations, the fund official said the IMF “staff remains engaged [with the government] to discuss policies to maintain stability” in Pakistan.

“The IMF team stands ready to work with the government in refining this Budget ahead of its passage,” Ruiz assured.

Pakistani analysts said they had already highlighted several areas of the economy that could have been taxed by the government or where it could have provided financial support.

Khurram Schehzad, CEO of Alpha Beta Core, a financial advisory firm, commented, “In the pre-budget debates, we mentioned which sectors to tax, where to provide support, and where to practice austerity. Now the IMF is saying it all, and it is totally opposite to what the government said in the budget speech and press conferences.”

“The Pakistani officials said the IMF was onboard with it over the budget and that the government had announced an even more conservative budget than the plan it had originally submitted to the IMF to meet its requirements,” he continued.

Dr. Khaqan Najeeb, a former adviser to the finance ministry, concurred with the view.

“The IMF statement about the budget is quite worrying and points to a number of meaningful changes which are required,” he said.

Pakistan still has to draw around $2.5 billion disbursement from the IMF, though it remains uncertain due to inconclusive negotiations and the content of the latest budget.
 


Pakistan’s Dr. Shahzad Baig makes it to TIME’s 100 world leaders in health

Updated 5 sec ago
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Pakistan’s Dr. Shahzad Baig makes it to TIME’s 100 world leaders in health

  • Before arriving in Pakistan, Baig was a technical adviser to Nigeria’s polio eradication effort, which remained successful
  • Pakistan, Afghanistan are only two countries in world where polio continues to threaten health and well-being of children

ISLAMABAD: US news magazine TIME has included Dr. Shahzad Baig, the Pakistan Polio Eradication Programme’s national coordinator, to its list of 100 most influential people across the world in the field of health in 2024.
The list, titled ‘TIME100 HEALTH,’ this week honored individuals from across the world for their services for fresh discoveries, novel treatments, and global victories over disease.
Baig was recognized for his efforts for the eradication of poliovirus, which mainly affects children under the age of ten years by invading their nervous system, and can cause paralysis or even death.
Pakistan and Afghanistan are the only two countries in the world where polio continues to threaten the health and well-being of children. 
“On the front lines in the effort to stamp it [polio] out is Dr. Shahzad Baig, national coordinator of Pakistan’s polio-eradication program,” TIME wrote on its website.
“In 2019, polio disabled or killed 147 people in Pakistan; since Baig assumed the position, in 2021, case counts have plummeted, with only six children stricken in 2023.”
Before arriving in Pakistan, Baig was a technical adviser to Nigeria’s polio eradication effort, which succeeded spectacularly, according to the US magazine.
In 2020, the African country became the most recent one in the world to be declared polio-free.
“If Baig has his way, Pakistan will be the next,” it added.


Canada has ‘political compulsion’ to blame India for Sikh slaying — New Delhi

Updated 05 May 2024
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Canada has ‘political compulsion’ to blame India for Sikh slaying — New Delhi

  • Canadian police on Friday arrested three for the murder of Hardeep Singh Nijjar, saying they were investigating their links to Indian government
  • The killing soured Ottawa-New Delhi diplomatic ties after PM Trudeau said there were ‘credible allegations’ linking Indian intelligence to crime

NEW DELHI: Canada’s investigation into alleged Indian involvement in the assassination of a Sikh separatist in Vancouver last year is a “political compulsion,” New Delhi’s foreign minister said after three Indian citizens were arrested over the killing.
Canadian police on Friday arrested the trio for the murder of Hardeep Singh Nijjar, saying they were investigating their links to the Indian government, “if any.”
The killing sent diplomatic relations between Ottawa and New Delhi into a tailspin last autumn after Prime Minister Justin Trudeau said there were “credible allegations” linking Indian intelligence to the crime.
India vehemently rejected the allegations as “absurd,” halting the processing of visas for a time and forcing Canada to significantly reduce its diplomatic presence in the country.
“It is their political compulsion in Canada to blame India,” the Press Trust of India news agency quoted external affairs minister S. Jaishankar as saying on Saturday.
Thousands of people were killed in the 1980s during a separatist insurgency aimed at creating a Sikh homeland known as Khalistan, which was put down by security forces.
The movement has largely petered out within India, but in the Sikh diaspora — whose largest community is in Canada, with around 770,000 people — it retains support among a vocal minority.
New Delhi has sought to persuade Ottawa not to grant Sikh separatists visas or political legitimacy, Jaishankar said, since they are “causing problems for them (Canada), for us and also for our relationship.”
He added that Canada does not “share any evidence with us in certain cases, police agencies also do not cooperate with us.”
Nijjar immigrated to Canada in 1997 and acquired citizenship 18 years later. He was wanted by Indian authorities for alleged terrorism and conspiracy to commit murder.
The three arrested Indian nationals, all in their twenties, were charged with first degree murder and conspiracy.
They were accused of being the shooter, driver and lookout in his killing last June.
The Canadian police said they were aware that “others may have played a role” in the murder.
In November, the US Justice Department charged an Indian citizen living in the Czech Republic with plotting a similar assassination attempt on another Sikh separatist leader on American soil.
A Washington Post investigation reported last week that Indian foreign intelligence officials were involved in the plot, a claim rejected by New Delhi.


PCB chief announces $100,000 reward for each player if Pakistan wins T20 World Cup

Updated 05 May 2024
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PCB chief announces $100,000 reward for each player if Pakistan wins T20 World Cup

  • Mohsin Naqvi made the announcement during his visit to Qaddafi Stadium, where the Babar Azam-led side has been practicing
  • The Pakistan side is scheduled to travel to Ireland, England for T20 tours later this month, followed by the World Cup in June

ISLAMABAD: Mohsin Naqvi, chief of the Pakistan Cricket Board (PCB), has announced $100,000 reward for each player in case the national side wins the upcoming Twenty20 World Cup, the PCB said on Sunday.
Naqvi made the announcement during his visit to the Qaddafi Stadium in Lahore, where the Babar Azam-led side began the national camp on Saturday, according to the PCB.
He stayed there for two hours and held a detailed discussion with Pakistan players on the strategy of upcoming games.
“This reward is nothing compared to Pakistan’s victory,” Naqvi was quoted as saying.
“I hope you will raise the green flag. Play without any pressure and compete hard. God willing, victory will be yours.”
The Pakistan side is scheduled to travel to Ireland and England for T20 tours later this month.
The tours will help the side prepare for the T20 World Cup scheduled to be held in the United States and the West Indies in June.


IMF says its mission will visit Pakistan this month to discuss new loan

Updated 05 May 2024
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IMF says its mission will visit Pakistan this month to discuss new loan

  • Pakistan last month completed a short-term $3 billion program, which helped stave off sovereign default
  • But the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program

KARACHI: An International Monetary Fund mission is expected to visit Pakistan this month to discuss a new program, the lender said on Sunday ahead of Islamabad beginning its annual budget-making process for the next financial year.
Pakistan last month completed a short-term $3 billion program, which helped stave off sovereign default, but the government of Prime Minister Shehbaz Sharif has stressed the need for a fresh, longer-term program.
“A mission is expected to visit Pakistan in May to discuss the FY25 budget, policies, and reforms under a potential new program for the welfare of all Pakistanis,” the IMF said in an emailed response to Reuters.
Pakistan’s financial year runs from July to June and its budget for fiscal year 2025, the first by Sharif’s new government, has to be presented before June 30.
The IMF did not specify the dates of the visit, nor the size or duration of the program.
“Accelerating reforms now is more important than the size of the program, which will be guided by the package of reform and balance of payments needs,” the IMF statement said.
Pakistan narrowly averted default last summer, and its $350 billion economy has stabilized after the completion of the last IMF program, with inflation coming down to around 17 percent in April from a record high 38 percent last May.
It is still dealing with a high fiscal shortfall and while it has controlled its external account deficit through import control mechanisms, it has come at the expense of stagnating growth, which is expected to be around 2 percent this year compared to negative growth last year.
Earlier, in an interview with Reuters, Finance Minister Muhammad Aurangzeb said the country hoped to agree the contours of a new IMF loan in May.
Pakistan is expected to seek at least $6 billion and request additional financing from the Fund under the Resilience and Sustainability Trust.


Pakistan PM extends condolences over death of Saudi poet Prince Badr bin Abdul Mohsen

Updated 05 May 2024
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Pakistan PM extends condolences over death of Saudi poet Prince Badr bin Abdul Mohsen

  • Prince Badr, affectionately known as the ‘word engineer,’ was a legendary figure in the contemporary Saudi poetry
  • His influence on art form was felt across the Gulf, while his eloquent verses left indelible mark on hearts and minds

ISLAMABAD: Prime Minister Shehbaz Sharif on Sunday extended his heartfelt condolences to Saudi Arabia’s Royal Family on the death of eminent Saudi poet, Prince Badr bin Abdul Mohsen, saying his legacy would continue to inspire generations to come.
The prince, affectionately known as the “word engineer,” was a legendary figure in contemporary Saudi poetry whose influence in the art form was felt across the country and the wider Gulf region, where his eloquent verses and poignant prose left an indelible mark on the people’s hearts and minds.
A pioneer in the popularization of Saudi poetry among Arab audiences, Prince Badr’s verses were immortalized in songs by many esteemed Arab artists, including Talal Maddah, Mohammed Abdu, Kadim Al-Sahir and Assala. His patriotic words and songs struck a deep chord with Saudis in particular.
In a post on X, Sharif said Prince Badr’s most popular song on Saudi Arabia’s National Day would always remind the world of his profound love for his country.
“His contributions to contemporary poetry in the Arabian Peninsula were truly remarkable and his legacy will continue to inspire generations to come,” the Pakistan premier said.
“May his soul rest in peace and may his words forever resonate in the hearts of poetry lovers around the world.”


Prince Badr was born on April 2, 1949, and his journey as a poet and cultural figure began at a young age. He studied in Saudi Arabia, Egypt, the UK and the US as he took his early steps on the path to becoming a significant figure in Arab literature.
As president of the Saudi Society for Culture and Arts, he played a crucial role in fostering artistic expression and influencing the development of poetry organizations in the Kingdom. In recognition of his outstanding contributions in the field, King Salman honored Prince Badr with the prestigious King Abdulaziz Medal in 2019.
Soon after, the Kingdom’s Literature, Publishing and Translation Commission announced plans to collect and publish his complete literary works to commemorate his enduring legacy and celebrate the profound impact he had on the Saudi creative movement during a five-decade career.