Govt presents ‘mini-budget’ to unlock $1.1bn IMF loan

In an effort to meet the requirements for releasing the $1.1 billion tranche of the International Monetary Fund (IMF) loan, Minister of Finance and Revenue Senator Ishaq Dar on Wednesday introduced the Finance (Supplementary) Bill 2023, also known as the "mini-budget," in the National Assembly and Senate.

The government approved increasing the Federal Excise Duty (FED) on cigarettes and raising the general sales tax (GST) rate from 17 to 18% last night in an effort to raise an additional Rs115 billion out of the Rs170 billion Pakistan agreed to in accordance with the IMF's conditions. The government is in a race against time to appease the IMF for the revival of the bailout program.

The Pakistan Democratic Movement (PDM)-the led government hopes to minimize the budget deficit and increase tax revenue through the "mini-budget" in order to satisfy the requirements set forth by the Washington-based lender.

Proposals

• Increase in GST on luxury items from 17% to 25%
• FED on business and first-class air tickets be increased to Rs20,000 or 50% — whichever is higher
• 10% withholding adjustable advance income tax to be imposed on marriage halls
• Increase in FED on cigarettes, soft and sugary drinks
• FED on cement to be raised from Rs1.5 kg to Rs2 kg
• Increase in GST from standard 17% to 18%
• GST to not be imposed on essential goods — wheat, rice, milk, pulses, vegetables, fruits, fish, eggs, meat
• BISP stipend to be increased; govt to allocate Rs400 billion for program

FinMin Dar claimed in his speech to the lower house that the Pakistan Tehreek-e-Insaf (PTI) government's "substandard" policies are to blame for the country's unparalleled issues.