NA passes four bills while opposition stages walkout; SBP makes first interest rate cut in four years
In Brief
ECONOMY
Tax suggestions: Internal inputs vs IMF recommendations
On 10 June, local experts in Pakistan revealed a package which proposes generating PKR 1.2 trillion more through income tax rate reduction and the withdrawal of exemptions, contradictory to the IMF’s recommendation to increase tax rates in the new budget to collect PKR two trillion more. These tax experts have said that the reforms would lead to a net gain of PKR 4.1 trillion over the course of three years without damaging the economy, including PKR 1.2 trillion in gains in the first year from four taxes. The Vice Chancellor of the Pakistan Institute of Development Economics (PIDE), Dr Nadeemul Haq, criticized the prime minister’s decision to get experts from the UK to make a local plan and stated: “The government should listen to its people instead of hiring foreign advisors for preparing a ‘home-grown package.” Earlier, the IMF had given Pakistan several instructions to Pakistan, which included imposing additional taxes worth PKR two trillion to achieve the annual tax target of PKR 13 trillion in FY25. This was to be done by increasing taxes on the salaries and non-salaried individuals and withdrawing sales tax exemptions.
However, local experts have proposed the government charge the same tax regardless of the income source, along with the removal of exemptions on agricultural income and making income a federal subject without any exemption. While the IMF suggested increasing the tax rate to 45 per cent, experts proposed reducing the burden and increasing the taxable income threshold from PKR 600,000 to PKR 800,000. For instance, for an income of PKR 200,000, the proposed tax rate is five per cent, significantly lower than the IMF’s demand. They demanded corporate tax rate be reduced to 25 per cent from 29 per cent. Further, they recommended withdrawing deemed rental income tax, Capital Value Tax, ten per cent super tax, and 1.2 per cent turnover tax. In spite of these reforms, the Federal Board of Revenue will still be able to achieve a PKR 1.6 trillion net increase in income taxes over three years. (Shehbaz Rana, “Local experts challenge IMF’s tax plan with innovative reforms,” The Express Tribune, 11 June 2024)
SBP makes first interest rate cut in four years following easing inflation
On 10 June, the State Bank of Pakistan (SBP) made its first policy rate cut in nearly four years by reducing it by 150 basis points to 20.5 per cent, in a move aimed at stimulating growth due to a significant fall in inflation. Economic stakeholders had been pressurizing the bank to reduce the interest rate as the real interest rate remained 10.2 per cent higher than the nominal rate. This had caused industrial frustration as the gap had hindered domestic investments and increased production costs. The SBP’s decision came after the headline inflation fell unexpectedly to 11.8 per cent in May. Earlier in June 2020, the interest rate was set at seven per cent, but in the aftermath of the COVID-19 pandemic, the SBP increased the rate to 22 per cent in June 2023 to counter inflation. The SBP’s Monetary Policy Committee (MPC) said that the near-term inflation outlook is susceptible to risks from FY25 budgetary measures and future adjustments in electricity and gas tariffs. IT noted: “On balance, the committee assessed that the current monetary policy stance remains appropriate to ensure that inflation stays on a downward trajectory.” As per provisional data cited by the MPC, the real GDP growth stayed moderate at 2.4 per cent in FY24, boosted by growth in agricultural growth. Moreover, a fall in the current account deficit allowed foreign exchange reserves to improve. The MPC advised that the timely mobilization of financial inflows is essential to meet the external financing requirements. (Shahid Iqbal, “State Bank delivers first rate cut in four years,” Dawn, 11 June 2024)
National Economic Council agrees to fund ongoing provincial projects, approves PKR 3.8 trillion PSDP
On 10 June, the National Economic Council (NEC) decided to continue funding constituency-based schemes and ongoing provincial projects, besides approving a PKR 3.792 trillion indicative national development plan for FY25 to increase economic growth to 3.6 per cent. This stance will mostly come under the IMF’s scrutiny as negotiations for a new bailout package are ongoing. Prime Minister Shehbaz Sharif presided over the meeting where an increase in the federal Public Sector Development Programme (PSDP) by more than 47 per cent to PKR 4.1 trillion was approved. The PSDP will reach a total size of PKR 1.696 trillion if another PKR 100 billion in public-private partnership (PPP) projects and PKR 197 billion in investments in development activities are included. It is 15-23 per cent higher than the PKR 1.221 trillion that the Annual Plan Coordination Committee (APCC) had approved. With a slight exception of Punjab, all four provinces objected to the APCC’s recommendation to exclude provincial projects from receiving federal funding through the PSDP. However, the NEC approved PKR 2.095 trillion worth of cumulative annual development plans and agreed to continue funding ongoing high-priority provincial projects that have been 80 per cent completed.
This is after Sindh’s chief minister argued that during the PTI-led government, his province suffered as no funding was given to their projects. Balochistan’s chief minister said that the development and infrastructure portfolio in his province was weak and that due to limited resources, the province has always relied on federal support. Khyber Pakhtunkhwa’s chief minister also remained concerned over the non-allocation of funds but said that the drafts he carried had been revised. (Khaleeq Kiani, “Budget 2024-25: NEC approves Rs3.8tr PSDP to boost economy,” Dawn, 11 June 2024)
JUDICIARY
NA passes four bills while opposition stages walkout
On 10 June, the National Assembly (NA) passed four bills- the Pakistan Broadcasting Corporation (Amendment) Bill, 2024, the Pakistan National Shipping Corporation (Amendment) Bill, 2024, the Pakistan Postal Services Management Board (Amendment) Bill, 2024,” and the National Highway Authority (Amendment) Bill, 2024. While moving the first bill, Federal Minister for Law Azam Nazeer Tarar said that the PBC Amendment bill is directed at giving the board of Radio Pakistan more autonomy to improve its governance and performance. Separately, the opposition staged a walkout from the NA to protest police actions that prevented PTI Secretary General Omar Ayub from appearing before a judge, which led to a dismissal of his bail petition in the 9 May riots case. Ayub told reporters that Prime Minister Shehbaz Sharif had given “instructions” to the police who had stopped him from entering the court. He stated in the NA: “Today, we are the victims, tomorrow it could be you.” Further, he condemned the actions of the Sargodha and Hafizabad police, who he claimed had detained PTI leaders on the pretext of a security search. (“NA passes four bills,” The Express Tribune, 11 June 2024)
SECURITY
We will eliminate the enemies of Pakistan, says PM Sharif
On 10 June, Prime Minister Shehbaz Sharif pledged to eliminate Pakistan’s enemies while attending the funeral of captain Muhammad Faraz Ilyas, who had been killed a day earlier as a result of a terrorist attack in the Lakki Marwat district of Khyber Pakhtunkhwa (KP). After meeting with Ilyas’ parents, Sharif announced that the captain’s native village would be transformed into a model village and renamed in his honour. Sharif stated: “We will completely eliminate the enemies of Pakistan. The blood of shaheed Captain Faraz Ilyas will not be in vain; his sacrifice will yield results.” This attack was also condemned by President Asif Ali Zardari, who paid tribute to the deceased soldiers and reiterated Pakistan’s resolve to eradicate terrorism. (“PM vows revenge on Pakistan’s enemies,” The Express Tribune¸ 11 June 2024)
AF-PAK
Business community and tribal elders appreciate decision to open Badini border crossing
On 10 June, tribal elders and businessperson of Qila Saifullah, Balochistan, welcomed the provincial government’s decision to open the Badini crossing point between Pakistan and Afghanistan for trade and immigration, saying it would enable trading with central Asian states. During a press conference, Haji Nazimuddin Kakar and Malik Bashir Malazai among other tribal leaders explained that the business community had been calling for the crossing to be opened after it was inaugurated by the then-Chief Minister Jam Kamal Khan in September 2020. Since then, locals have given 300 acres of private land to the Federal Board of Revenue for free, to construct terminals and roads. However, in July 2021, authorities stopped work on the trading terminal and since then the crossing has not been used. Kakar noted that the business community was not in favour of closing any crossing points as it wanted free legal trade from the Badini border, and stated: “We are very happy with the opening of Badini crossing point for regular trade and immigration.” He called on the government to finish the remaining construction work and law down infrastructure such as roads and telephones. He noted that “Afghanistan has also started the construction of roads and complexes for Customs and other institutions at its side,” and said that Pakistan should do the same. (Saleem Shahid, “Tribal elders, traders welcome opening of Badini crossing for trade,” Dawn, 11 June 2024)
INDIA VIEW
Defence minister says PM Sharif’s wishes to Indian PM were a “diplomatic compulsion”
On 10 June, PML-N President Nawaz Sharif expressed “warm felicitations” to Indian Prime Minister Narendra Modi for “assuming office for the third time.” He noted that the election result reflected the “confidence of the people” in his leadership, and added: “Let us replace hate with hope and seize the opportunity to shape the destiny of the two billion people of South Asia.” Shortly after, Modi responded to Nawaz’s message on X, saying that Indians have “always stood for peace, security and progressive ideas.” He added that his government would always prioritize “advancing the well-being and security” of its people. Separately, Pakistan’s Prime Minister Shehbaz Sharif also took to X to congratulate Modi “on taking oath as the Prime Minister of India,” with Modi thanking Shehbaz for his “good wishes” shortly after. However, Pakistan’s Defence Minister Khawaja Asif described Sharif’s congratulatory message as a “diplomatic compulsion,” and clarified that Pakistan had not sent any “message of love” to Modi. He explained that this is because Pakistan would never forget that Modi is a “murderer of Muslims” in India. (“Nawaz Sharif, Narendra Modi exchange rare greetings after Indian elections,” The News International¸10 June 2024; “PM Shehbaz congratulates Narendra Modi on taking oath as premier,” The News International, 10 June 2024; “'Diplomatic compulsion', says defence minister on PM Shehbaz's greetings to Modi,” The News International, 10 June 2024)
PROVINCES
Punjab: PPP expresses concern over being left out of discussions on critical issues
On 10 June, the PPP expressed concern over not being consulted by the Punjab government on critical matters such as the budget and the defamation law. While the PML-N enjoys a simple majority in the province, the PPP has supported it in the assembly for legislative affairs. PPP Central Punjab general secretary Syed Hassan Murtaza said that his party did not vote for the PML-N to “prepare the budget in the kitchen,” and addressed Punjab Chief Minister Maryam Nawaz Sharif while saying that the PPP was not taken “into confidence while preparing the budget approvals.” While the “PPP had high expectations” from Maryam, this would be the first budget according to Murtaza where the allies and stakeholders of the government were not taken into confidence. He also lamented that farmers in Punjab are suffering because the provincial agricultural department “could not formulate a comprehensive policy” to procure wheat before sowing began. On the Punjab Defamation Act 2024, Murtaza said his party stands with journalists as it is “not in favour of restricting the freedom of expression.” He added that his party would go to court against the law and the move, and would “try to get the law withdrawn” as the PPP “cannot become part of any anti-media law.” (Amjad Mahmood & Wajih Ahmad Sheikh, “PPP feels ‘left out’ from budget, defamation law discussions,” Dawn, 11 June 2024)
Khyber Pakhtunkhwa: PTI leader accuses centre of allegedly depriving the province of funds
On 10 June, former National Assembly speaker and PTI leader Asad Qaiser alleged that 91 projects of Khyber Pakhtunkhwa (KP) were excluded from the federal development budget, because of which there was a resurgence of terrorism. He explained that these projects were related to health, education, and energy, and stated: “We were told that additional three per cent of the NFC award will be given to KP because of the merger of erstwhile Fata but even that promise could not be fulfilled. Every year we have to get PKR 100 billion but the amount is not being released.” He claimed that the province was not given funds because the PTI was ruling there, while PTI leader Atif Khan added that the province was facing a severe crisis of electricity load-shedding. He commented: “If electricity is being theft, why action could not be taken against a single lineman. I fear that the electricity prices will further increase after the announcement of budget.” (Ikram Junaidi, “Depriving KP of uplift funds fuelling terror surge, says PTI,” Dawn, 11 June 2024)
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My warm felicitations to Modi Ji on assuming office for the third time. Your party's success in recent elections reflects the confidence of the people in your leadership. Let us replace hate with hope and seize the oppurtunity to shape the destiny of the two billion people of South Asia.
-Nawaz Sharif
X is shut down in Pakistan and there is criminal silence on this issue.
-Sami Abraham
Pakistan’s defeat against India has also sparked comments that border on ethnic discrimination. Former Pakistani player Ijaz Ahmed, speaking on national television, attributed the loss to the Pashtun players, stating, eighty percent of team players are Pashtuns, most of them are uneducated and villagers; the only exposure they have is to go to mosque, thus they cannot bear the pressure resulting in defeat. Neither the host nor the panelists questioned these remarks, which raises serious concerns about the presence of ethnic bias and racism in the discourse surrounding the team's performance. Such language is not only inappropriate but also perpetuates harmful stereotypes and undermines the integrity of the sport.
-Rahman Bunairee
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Jawed Naqvi, ‘The change is welcome, if cosmetic’
Dawn, 11 June 2024
“Beyond the cosmetic veneer is the question: can he solve India’s problems of unemployment and biting inflation? Not within the confines of the neoliberal top-down economy he embraced, in fact, inherited from Manmohan Singh’s government. He gave five kilos of rice to the poor with his photo beaming from every bag or gas cylinder given in heavily advertised charity. During the campaign, he was seen asking the people to return the favour — and would they not. Indeed, many women voted for him.”
Editorial, ‘Interest rate cut’
Dawn¸ 11 June 2024
“That the SBP decision comes just ahead of the announcement of the budget, and in the midst of negotiations between the government and the IMF for another bailout package, it underscores the bank’s confidence that economic stability is gaining traction and that concluding a new agreement with the Fund is just a matter of time. The monetary policy decision is based on the bank’s understanding that inflation out-turns last month were better than expected, and that underlying inflation pressures are receding amid appropriate fiscal and monetary policies.”
Dr Rakhshinda Perveen, ‘Normalising the lives of divorced women and mothers in Pakistan’
The Express Tribune, 11 June 2024
“It is reassuring to see the persuasive voices on women’s rights and marital status among Generation Z and the Millennials. What was hushed then is now heard across all forms of media. Media is bringing about a silent revolution. Yet, our public sector organisations seem to be on a different frequency and are not ready to dismantle endemic, epidemic and pandemic patriarchy. Some powerful international players, identified as technical and aid agencies, are also looking into the ease of doing business for women and the empowerment of women in greater detail with an intersectionality lens. Nothing can be successful without terminating institutional discrimination.”
Niaz A Shah, ‘Independence of judiciary under Islamic law’
The Express Tribune, 11 June 2024
“Pakistan is an Islamic Republic and Islam is an official religion. All laws — existing or future — must be compatible with Islamic law. All laws also be interpreted compatibly with Islamic law. Judges are required to be impartial, stand firm against pressures and the government must ensure their independence as required by Islamic law. Those who betray their trusts e.g. public servants breaching their oaths, are described by the Holy Quran (4:105) as khaineen (singular: khain): traitors or unfaithful to their trust. The message of the Holy Quran for khaineen is clear: it is a gravely punishable sin and “they may hide (their crimes) from men but they cannot hide (them) from Allah” (4:108).”
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“Many are scared of a public discussion on the issue of Pakistan’s minorities.”
-An opinion in Dawn, ‘Minority rights’
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