With a no-confidence motion looming, Pakistani Prime Minister Imran Khan appears in the mood to hand out subsidies to the public, even at the expense of an already troubled economy.
Miftah Ismail, the former Pakistani finance minister under Shahid Khaqan Abbasi’s prime ministerial office, called the industrial package announced by Imran Khan a “bombshell” designed to destroy the country’s economy for the next government, Business Recorder reported.
Many economists have to agree, despite PM’s claim that the bailout package was possible because of improved tax revenues. These can be reasoned because – firstly – Rs.3,799 trillion in tax revenue (July-February 2021-22) meets the budgeted target of Rs.5.8 trillion, but the remaining four months of the current fiscal year are likely to be in deficit, as the State Bank of Pakistan (SBP) allows the rupee to depreciate further to curb imports — imports that accounted for 52.2 percent of total tax revenue in the first eight months of this year.
Secondly, there has been a significant drop in non-tax revenue receipts, particularly petroleum levy receipts which are budgeted at Rs 610 crore, while actual receipts are expected to be less than half as a result of the bailout package.
Another reason not to support Imran Khan’s industry package announced on March 1 is that Pakistan remains on the Financial Action Task Force (FATF) gray list. Ongoing talks on the seventh review with the International Monetary Fund (IMF) have stalled as the fund and all other international donor organizations have pledged to work with the FATF.
In addition, the package provides for tax and monetary benefits to be granted to the rich and influential at the expense of the general public. The conflict between the prime minister’s claim that ‘mafias’ operate in all major sectors, making windfall profits, and his industry package, which would primarily benefit these mafia groups – those operating in the legal and illegal spheres – will be resolved with the passage of unfortunately getting sharper time.
The Imran Khan government’s aid measures to cut fuel and electricity prices, announced on February 28, 2022, have come as a result of opposition pressure and public anger. The relief efforts were announced by Imran Khan in an address to the nation. The measures include a cut in the price of petroleum products and electricity tariffs by Rs 10 and Rs 5 respectively, along with a raft of new rules including one on tax amnesty.
(Only the headline and image of this report may have been edited by Business Standard contributors; the rest of the content is auto-generated from a syndicated feed.)
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