In Brief
PAKISTAN ELECTIONS 2024
PR EXCLUSIVE UPDATE #78
Shehbaz Sharif wants a swift bailout package with the IMF
On 4 March, after taking administering oath to the office of the Prime Minister, Shehbaz Sharif in his maiden meeting gave a green signal to begin negotiating a new long-term bailout package with the IMF. Focusing on the country’s economic situation, he recommended strengthening the Special Investment Facilitation Council (SIFC), shutting down enterprises that were making losses, and preparing a roadmap on war footing. The absence of former Finance Minister Ishaq Dar and the presence of the President of Habib Bank Limited, Muhammad Aurengzeb, indicated that Sharif intends to form an economic committee that is not solely based on experience. Sharif was briefed by the Finance Secretary, Imdadullah Bosal, on the fiscal situation, implementation of the IMF’s conditions, and probable demands of the IMF for the new programme the country is seeking. He was also briefed on the shortfall in the FBR tax revenues and the possibility of revenue measures.
On 4 March, The News International reported that the IMF recommended the Federal Board of Revenue (FBR) to include a few dozen products in the standard rate of General Sales Tax (GST) of 18 per cent, to help yield revenues of 1.3 per cent of GDP. Some products listed included unprocessed food, stationery, medicines, and POL products; however, the IMF is yet to see whether this increase in GST through indirect tax could push up inflation. Further, the IMF recommended eliminating all zero ratings under the Fifth Schedule except for exported goods, restricting exemptions under the Sixth Schedule to the supply of residential property, and removing reduced rates under the Eighth Schedule. Other goods under all three Schedules are to be brought to the standard rate of GST. Thus, in all, “the IMF has asked removing all compliance related distortionary tax policy changes which include eliminating the minimum taxes and surtaxes as well as removing the Ninth and Tenth Schedules.” Zero rating items under the Fifth Schedule could include supply to diplomats, components and goods for further manufacture of goods in the Export Processing Zones, and supplies made to exporters under the Duty and Tax Remission Rules, among others. The Sixth Schedule may include products like edible vegetables imported from Afghanistan, rice, wheat and meslin flour, and the Holy Quran, among others. Lastly, the Eight Schedule of sales tax could include natural gas and phosphoric acid.
Commenting on the Moody's rating, a Dawn editorial said: “The rating indicates a higher probability of default and a greater degree of investment risks amid weak debt affordability. It also takes into account Pakistan’s low growth rate and high exposure to extreme weather events, which can increase economic and social costs, with high debt-servicing requirements reducing the fiscal flexibility to undertake key expenditures on infrastructure and social initiatives.”
(Shahbaz Rana, “PM gives nod to IMF talks for long-term bail out,” The Express Tribune, 5 March 2024; Mehtab Haider, “IMF wants govt to impose 18pc GST on POL products, unprocessed food, stationery,” The News International, 4 March 2024; “Unchanged rating,” Dawn, 29 February 2024)
ALSO READ
Misbah Khan, ‘Pakistan’s economic legacy’
The News International, 4 March 2024
“The process of development in Pakistan faced its first major challenge early in the third five-year plan. The plan as originally formulated was an attempt to extend the success of the second plan on a broader front. The events of 1965 and their various repercussions on the economy changed these assumptions in a fundamental manner and the basic strategy of the plan had to undergo a drastic revision.”
Mehtab Haider, ‘IMF wants tax burden on non-salaried, salaried class increased’
The News International¸2 March 2024
“The IMF has asked the FBR for reviewing the Second Schedule and Chapter III of the Income Tax Ordinance (ITO) to eliminate preferential treatment to employees in specific sectors, tax credit for investment in shares, deduction for mortgage payments, tax deductions for full time teachers and researchers and maintain the zero rate threshold at the same levels if it is not possible to reduce it.”
Dr Abid Qaiyum Suleri, ‘What economic challenges loom ahead?’
The News International, 1 March 2024
“The FBR's commendable revenue growth, while impressive at twenty-nine percent from July 2023 to January 2024, loses its lustre when accounting for the thirty percent inflation during this period. Broadening the tax net and improving the quality of taxes (shifting from indirect to direct taxes) is a must for revenue growth in real terms. Successive governments in the past failed to tap the true tax potential of sectors such as real estate, retail, and income on agriculture. How the new government will fare on this front needs to be seen.”
Zafar Masud, ‘Fix fiscal account to tame inflation’
Dawn, 10 February 2024
“Pakistan needs recalibration perhaps more than others as it confronts regional conflicts both communal and transnational, along with complex forms of conventional and unconventional inflations — ‘debt-flation’, ‘shrink-flation’, ‘greed-flation’ — which are manifestations of both structural deficits and post-Covid pro-cyclical policies.”
20 PTI activists granted post arrest bail in 9 May riot
On 4 March, an antiterrorism court granted post arrest bail to 20 PTI activists in the Jinnah House attack case of the 9 May riots. Subject to furnishing surety bonds, Judge Naveed Iqbal allowed the bail petitions. Following the 9 May riots, the Sarwar road police registered a case against PTI leaders for attacking and burning down the Jinnah House, which serves as the residence of Lahore’s corps commander. In protest of Imran Khan’s arrest, PTI leaders and activists attacked public and private properties, especially the military facilities. Separately, the antiterrorism court extended the pre-arrest bail of PTI’s former Secretary General Asad Umar in the Shadman police station till 7 March. Furthermore, the court has allowed an application seeking a one-time exemption from physical appearance. (Wajih Ahmad Sheikh, “20 PTI activists in Lahore granted post-arrest bail in May 9 case,” Dawn, 5 March 2024)
PkMAP holds a protest condemning the raid on its chairman’s residence
On 4 March, the Pashtunkhwa Milli Awami Party (PkMAP) held a rally protesting a raid on the residence of its chairman Mahmood Khan Achakzai, and announced a shutter strike to be observed on 5 March. The Quetta district justified the raid by alleging that they recovered a government-owned land that was “illegally occupied” by Achakzai. However, the party supporters rejected these claims and held the rally, while the lawyers’ community did not appear in district courts. A large number of party workers carried flags, placards, and banners, condemning the raid and stating that Achakzai was targeted for a speech he made in the National Assembly last week. The rais were also condemned by PTI leader Ali Muhammad Khan, who said that any issues “should be addressed in the parliament.” (Saleem Shahid, “PkMAP holds rally against raid on Achakzai’s home in Quetta,” Dawn, 5 March 2024)
POLITICS
PPP Senator withdraws resolution seeking a complete ban on social media platforms
On 5 March, Dawn reported that PPP senator Bahramand Khan Tangi withdrew his resolution that sought to ban social media platforms in the country in order to “save the young generation from their negative and devastating effects.” The resolution that he proposed sparked criticism among digital rights activists and journalists, who claimed that such a resolution would infringe upon the freedom of expression. After being silent in a Senate session that passed a controversial resolution aimed at delaying polls due to security concerns, Tangi was presumed to be expelled; however, as per the Senate Secretariat’s record, Tangi is still a senator of PPP. PTI’s Senator Saifullah Abro asserted that the resolution was an “attack” on the youth, adding that it had been proposed in order to suppress the voice of the youth. (“Senator withdraws resolution to ban social media,” Dawn, 5 March 2024)
PTI secretary general calls for judicial probe into cipher case
On 4 March, PTI’s Secretary General, Omar Ayub Khan, asked for a judicial inquiry into the cipher case, in which Imran Khan and former Foreign Minister of Foreign Affairs Shah have been sentenced to ten years in prison. Ayub contended that it was the responsibility of the then prime minister’s military secretary to keep the cipher documents safe, and thus if “the case is to proceed, it should be proceeded against these persons.” He also stated that Bilawal Bhutto Zardari, who discussed the cipher case and Khan in the lower house of Parliament, did not “know the cipher’s mechanism.” PTI member and former National Assembly speaker Asad Qaiser spoke on the case as well, stressing that neither Khan nor the party would “compromise” on their principles, and called for the release of PTI officials. (“PTI demands 'judicial inquiry' into ciphergate case afresh,” The News International, 4 March 2024)
ECONOMY
SBP governor claims access to financial services is a fundamental right of citizens
On 4 March, the State Bank of Pakistan’s (SBP) Governor, Jameel Ahmad, described access to financial services as a fundamental right, highlighting that the SBP’s goal was to empower citizens by providing tools that would help them participate in the economy. He explained how an inclusive finance sector would not only boost the growth of the banking industry but also augment monetary policy transmission channels and make them more effective. Ahmad claimed that SBP vied to increase the availability and utilization of financial services for people and business, and had taken key initiatives in this regard including expanding services to under-banked segments of societies, and implemented policies such as the National Financial Inclusion Strategy, National Financial Literacy Programme and Banking on Equality Policy. He also cited specialized schemes such as the SME Asaan Finance Scheme (SAAF), Refinance and Credit Guarantee Scheme for Women Entrepreneurs, and Line of Credit for MSME. These comments were made at the Pakistan Financial Literacy Week event, which was attended by presidents and CEOs of commercial banks, senior officials from the World Bank and other stakeholders. Following Ahmad’s address, there was a panel discussion that looked into emerging trends, challenges, and opportunities in the digital finance sector. (“Access to banking is a fundamental right: SBP,” Dawn, 5 March 2024)
JUDICIARY
Supreme Court accuses LHC of overstepping jurisdiction in Musharraf case
On 4 March, the Supreme Court (SC) ruled that the Lahore High Court’s (LHC) order of giving a death sentence to former military ruler in General Pervez Musharraf in 2020, was unconstitutional as the court assumed the exclusive jurisdiction of the trial court and usurped the appellate jurisdiction of the apex court. SC Justice Syed Mansoor Ali Shah, who was a part of the four-judge SC bench which on 10 January 2024 upheld the death sentence to Musharraf, stated: “The high court should have remained within the confines of the dispute brought before it and decided the same in accordance with the law and the Constitution.” A three-judge LHC bench had held the Musharraf’s trial in absentia was illegal and repugnant to injunctions of Islam, as well as Articles 2A, 8 and 10-A of the Constitution. However, Shah pointed out the LHC assumed a jurisdiction it did not have and unlawfully assumed the appellate jurisdiction that is exclusive vested in the SC. He detailed that even though no prayer was made to seek a determination whether Musharraf had committed high treason, the LHC still proceeded to hold that Musharaff’s actions were not part of Article 6 at the time of the offence. The judgement added that the LHC deemed Section 9 of the Special Court Act as ultra vires of the Constitution, despite the respondent challenging only its “offending portion.” Further, the LHC failed to abide by earlier judgments of the SC, thus undermining the credibility of the judicial system. (Nasir Iqbal, “LHC unlawfully assumed top court’s jurisdiction in Musharraf case: SC,” Dawn, 5 March 2024)
EXTERNAL
US State Department expresses commitment to “longstanding partnership with Pakistan”
On 4 March, the US State Department expressed the US’ commitment to maintaining and strengthening its robust partnership with Pakistan, under the tenure of Shehbaz Sharif. The Department’s spokesperson, Matthew Miller, commended Maryam Nawaz’s appointment as the first female chief minister, expressing hope that this “milestone in Pakistani politics” would enable more women to be involved in the country’s politics. He appreciated “cracks in the glass ceilings,” adding that the US was looking “forward to cooperating with Pakistan more broadly on integrating women more fully into the country’s political life, the economy,” and other “decision-making spaces.” Miller reiterated that the US values “the longstanding partnership with Pakistan,” and regards “a strong, prosperous, and democratic Pakistan as crucial to United States-Pakistan interests.” He added that the US would “continue to focus” on “shared interests” while engaging with Sharif and his government. (Anwar Iqbal, “US seeks to continue ‘robust’ ties with new govt,” Dawn, 5 March 2024)
SOCIETY
Activists announce ‘Working Women’s Rally’ to be held on International Women’s Day
On 4 March, rights activists announced that a ‘Working Women’s Rally’ would take place on 8 March in observance of International Women’s Day. Activists highlighted and condemned recent acts of violence against women, including the mob attack on a woman wearing a dress with Arabic script written on it, and the murder of the teacher Hidayat Lohar. They demanded the arrest of the anti-women and extremist elements involved in these cases. The rally would include speeches by prominent women leaders belonging to resistance movements, revolutionary songs, and a presentation of a tableaux based on women’s rights and struggles. Thousands of workers, labourers, fishermen, journalists, and teachers are expected to attend. A member of the Home Based Women Workers Federation, Zehra Khan, announced the slogan will be: ‘Women’s Resistance: For Democratic Freedom, Economic Autonomy and Social Security.’ She added: “We, the working women, the resistant women, who are half of the population, will reaffirm on this day that our relentless struggle will continue against the shrinking democratic freedoms, increasing economic helplessness and imposed social decline. The resistant role of women in the ongoing struggle is emerging as a hope for society.” The chairperson of the Human Rights Commission of Pakistan, Asad Iqbal Butt, said that the struggle of a working woman would be successful when she “strengthens her connection with the political process and the struggle for the rights of her class, the oppressed and the subjugated people, and the most important and first principle of this is resistance.” (“Rights activists in Karachi demand action against ‘anti-women’ elements,” Dawn, 5 March 2024)
PROVINCES
Khyber Pakhtunkhwa: CM Gandapur to prioritize law and order
On 4 March, the Khyber Pakhtunkhwa (KP) Chief Minister Ali Amin Khan Gandapur announced that his government would prioritize improving the province’s law and order situation, with more funds to be allocated to the police to boost their performance. He clarified that no one should be “afraid” of the reforms, as they “will be meant to improve the system and not to target anyone.” Gandapur added that the next priority would be eradicating poverty and unemployment, and increasing welfare to the vulnerable sectors of society. According to him, since financial issues had negatively affected the common people, these matters should be addressed swiftly. Additionally, he promised the development of infrastructure on the basis of a strategy. (Faiz Muhammad, “Gandapur promises adequate funds to police,” Dawn, 5 March 2024)
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"Imran Khan's leadership continues to shape Pakistan's political landscape. Whether you agree or disagree with his policies, there's no denying his impact on the nation's trajectory"
-Atifa Tareen
"Pakistan's debt outlook improves as Bank of America sees easing political uncertainty."
-Farukk Saleem
"Pakistan has pledged to facilitate two Centres of excellence in Uganda in the application of artificial intelligence in Agriculture value addition and human nutrition research Centres."
-Akim Agaba
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Arifa Noor, ‘Question of age’
Dawn, 5 March 2024
"Shebhaz Sharif is the new prime minister of Pakistan and the first one to sit in this chair for consecutive terms; he is also the second to get here after having served as chief minister of Punjab. He first headed Punjab in 1997, which was 27 years ago.The election season is yet to end, with the approaching vote for the new president and some Senate seats. It’s perhaps safe to say, Asif Ali Zardari will soon be the new president of Pakistan, a position he last held over 10 years ago, though, of course, his political career began in 1990 when he won a seat in the National Assembly some 34 years ago. The new Speaker of the National Assembly, Ayaz Sadiq, is now settling down in this position for the third time, having first won a seat in 2002."
Arooj Waheed Dar, ‘Common ground’
Dawn, 5 March 2024
"Amid this air of forgetfulness, it is crucial to remind political representatives of the promises they made in their poll campaigns. Holding parties accountable for their performance is crucial to steer Pakistan towards stability and progress, and to ensure that the trust of the people is upheld, democratic principles respected, and the nation’s long-term interests safeguarded. Given our economic and social challenges, collective commitment from all political stakeholders is urgently required for transformative reforms. Since the new government is a minority dispensation, there is a real opportunity for parties to jointly develop a charter of economy, comprising at the minimum what the PML-N and PPP individually promised in their manifestos."
Editorial, ‘Reserved seats’
Dawn, 5 March 2024
"The ECP’s decision to deny the Sunni Ittehad Council the new home of PTI-affiliated lawmakers who won the Feb 8 polls as independent candidates a share of the special seats reserved for women and minorities has come as a disappointment to those who believed in the fairness of the electoral process.Even though the much-delayed ECP decision, the latest in a series of moves ostensibly aimed at keeping the PTI out of elections and parliament, was not unexpected, many had hoped that the spirit of democracy would prevail over the technicalities cited by the ECP to justify its action."
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“Stability alone doesn’t result in durable growth."
-An opinion in Dawn, ‘Destined to fail?'
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