SBP (Amend) Bill, mini-budget to go to Senate next week
ISLAMABAD: While the government has met the IMF’s two most critical conditions for approving the sixth review, the government must seek Senate approval of the controversial State Bank of Pakistan (SBP) amendment bill next week to avoid derailing the fund program .
The government has moved only halfway, having won the National Assembly’s approval of the Tax Law Supplementary Law and the SBP Amendment Law by a simple majority. Now phase two begins next week, during which the government must seek approval from the Upper House of Parliament (Senate) for the controversial 2021 SBP Amendment Bill.
The mini-budget had already been passed with few changes, with the few changes approved by the government costing only Rs 1-1.5 billion, leaving its budget target of catching Rs 343 billion intact. It was yet to be seen how the IMF would respond to the Rs.343 crore revenue-generating effort with the help of the Tax Laws Supplementary Bill 2021.
“If the SBP Amendment Bill stalls in the Senate and the government does not get approval, then it has no choice but to hurry to convene a joint session of Parliament to get approval of this bill. Otherwise, the deadline for convening the IMF Executive Board meeting on January 28 or 31 cannot be met,” the sources said.
There is a risk in case of delays because if Pakistan fails to meet two key IMF conditions, including parliamentary approval of the mini-budget and SBP amendment law by February, then the IMF could demand new negotiations based on the latest data by March 31. December 2021 on the macro front.
Earlier, Treasury Secretary Shaukat Tarin hinted as much, saying that the IMF had asked for new negotiations but had declined. In the event of delays in meeting the two key conditions, the IMF could revisit this issue of conducting new negotiations based on the latest data available. Under such circumstances, as the macroeconomic situation deteriorates, the IMF may prescribe new strict conditions, so the government makes every effort to avoid such an unjustified situation.
Through the approved Tax Law Amendment Act 2021, the National Assembly approved deducting 17 percent GST on bicycles, which was previously proposed. The government also withdrew 17 percent GST on red chili peppers and iodized salt, but imposed GST on bread, vermicelli, naan, chapatti, sheermal, buns and rusks sold by all grocery stores, bakeries and restaurants sold through POS machines were integrated into the FBR.
The government raised the sales tax rate on imported electric vehicles (EV) to 12.5 percent, but the GST for hybrid vehicles up to 1800cc remained unchanged at 8.5 percent. For imported cars with 1001-1799cc engines, the FED was doubled from 5 to 10 percent, for 1800-3000cc engines rates were increased from 25 to 30 percent, and from 3001cc engines from 30 to 40 percent .
The National Assembly also adopted the National Information Technology (NIT) Board. The NITB bill states that it is expedient to provide for the establishment of the National Information Technology Committee on e-Governance across the country, in line with the vision and policy of the federal government, to serve the public through appropriate advice and in a more effective and efficient manner. Advice and Provision of e-governance software applications for federal ministries and departments, including their affiliated departments, subordinate offices and autonomous bodies.