With the winter sessions commencing for both the houses of parliament from Wednesday, the government was planning to present the mini-budget involving fiscal adjustments and expenditure cuts worth about Rs600 billion as part of an understanding with the International Monetary Fund (IMF). The opposition parties had already announced well in advance that they would not approve the passing of this budget, and sources revealed that a protest had been planned over the increase in the power tariff and shortage of gas for domestic consumers.
None of this materialised however, because the government has decided to withdraw the mini-budget encompassing Tax Laws (Fourth) Amendment Bill from the federal cabinet and decided to hold further consultations with Prime Minister Imran Khan for devising a fresh strategy. This change in strategy raises several concerns. The unveiling of the budget in parliament was being considered as a prerequisite for Pakistan’s request to the IMF board for approval in the middle of January 2022—the release of $1 billion for the country is contingent on that approval. It is evident that the government was not confident of gaining sufficient support in the parliament, especially in light of the increasing criticism over economic performance and the recent local government election results in KP.
Now that it is increasingly unlikely that the government will be able to get parliamentary approval before the January 12 deadline, the PTI is hoping to convince the IMF that it would present the mini-budget through a Presidential Ordinance. Considering that the IMF in the past has sternly turned this down as an option, it is unclear why the government thinks it has a better chance of convincing them this time around.
Regardless of whether the IMF would budge on this prerequisite for parliamentary approval, it would set a dangerous precedent. Such consequential decisions cannot be bulldozed through ordinances and there needs to be a healthy debate on why the government feels that imposing a blanket sales tax is a good idea. The opposition too needs to present its case and must do away with hand-wringing and dramatised protests. Given the dire situation we find ourselves in, the last thing we need is political theatre. With the IMF programme renewal deadline approaching, the options for the incumbent government are limited and it remains to be seen what strategy it comes up with to deal with this quagmire.