Money Budget Reality?

 The money budget presented by #the government in the parliament this month has been repeatedly accused by the opposition that its passage would put Pakistan's security at stake.

Similarly, some other economists and rumor mongers are also busy spreading rumors among the people regarding this finance bill as if the #PTI government is going to do something against the national interest which could jeopardize the country's integrity or nuclear assets. There will be severe damage.

In this regard, there is a need to impartially inform the people of Pakistan about the pros and cons of this mini-budget. It is a fact that the PTI government under the leadership of Prime Minister Imran Khan has put the country's economic direction on the right track and now we need to document the undocumented economy to further accelerate its pace.

At present, Pakistan has set a record for the largest export in its history, while remittances from Pakistanis abroad have also increased to a record level. But the economic burden of external debt has become so high that it has become necessary for the government to pass a mini-budget to maintain its credibility in the international financial institutions and reduce the fiscal deficit.

It should be noted that an agreement was reached between Pakistan and the International Monetary Fund (IMF) on November 22 last year under which the IMF would resume the program which was stalled in April last year. One billion dollars will be provided.

Under the agreement, #Pakistan needs to implement all the policies and reforms required for the  6 billion Extended Fund Facility (EFF).

In order to raise 1 billion in this regard, it is necessary to implement the five points agreed upon. Among them, approval of the State Bank of Pakistan Amendment Act 2021 is required, through which various changes have been proposed in the State Bank of Pakistan Act 1956. It also includes the abolition of tax breaks and an increase in government duties on electricity prices.

In addition, the audit of the nearly  1.5 billion loan given to Pakistan in April 2020 to curb the epidemic is also part of this package to improve financial discipline in Pakistan and lay the foundation for future economic growth. It is pertinent to mention here that the State Bank of Pakistan Act, 1956, which clarifies the role of State Bank of Pakistan, has already undergone several changes and amendments in 1994, 1997, 2012 and 2015.

The SBP Amendment Act 2021 is also a link in the same chain to reduce government interference by creating more transparency in SBP affairs.

In this regard, it is wrong and baseless to say that Pakistan will become a colony of the IMF and the Governor of the SBP will become the Viceroy of the British era.

It is important to keep in mind that the government has already made every effort in negotiations with the #IMF to provide maximum relief to the people in the mini-budget so as not to tax low-income items. Uses.

The working class of Pakistan should be satisfied that despite a meager budget, basic food items like flour, sugar, rice and pulses will not be expensive as these items are not included in the increase in sales tax rate and the resulting rebate. While pulses imported from abroad are already in the net of sales tax.

In addition, the government has withdrawn its decision to impose sales tax on many more items, including bakery items and other consumer goods, at the suggestion of its legislators, allies and stakeholders. However, it is worth mentioning here that abolishing sales tax exemption on raw materials and raising its rate to 17% is likely to have a negative impact on the economy and production process.

The rising cost of raw materials can slow down the production process which can lead to reduction of employment opportunities. There is a risk of an increase in trafficking. In this regard, we have the example of petroleum products and edible oil that as their prices are increasing, so is the demand and supply of smuggled petrol and edible oil.

Similarly, in the mini-budget, the 17% GST levied on the import of raw materials used in the manufacture of medicines has been declared refundable, but the payment of refunds in Pakistan is usually very late. Therefore, it is more likely that pharmaceutical companies will increase their prices instead of bearing the financial burden themselves, which will make medicines more expensive.

The government should reconsider this decision and formulate a plan of action to prevent the rise in prices of medicines. Such measures would also serve the purpose of bringing the undocumented economy under the tax net. It will not have a negative impact on the people of Pakistan.