Friday, 19 August 2022

Federal Cabinet second time defers highly inflationary mini budget

The federal cabinet on Tuesday approved the State Bank of Pakistan (SBP) amendment bill to give absolute autonomy to the central bank in a bid to qualify for the $1 billion loan, but on the other side deferred the approval of Rs360 billion mini-budget for the second time in a week.

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Approval of amendment bill of State Bank of Pakistan

Federal cabinet was headed by Prime Minister Imran Khan, the cabinet cleared the revised draft of the SBP amendment bill, 2021, Information Minister Fawad Chaudhry confirmed after the meeting.

Amendments in the SBP Act of 1956 approved under one of the conditions of the International Monetary Fund (IMF) and on the desire of the State Bank of Pakistan governor.

Many of the clauses that the federal government had earlier termed “unconstitutional” are still part of the revised bill after the IMF refused to move from its position.

Mini Budget

On the other side, the government again deferred the approval of the highly inflationary Rs360 billion mini-budget on the reasons of strong criticism against the Ministry of Finance due to increasing inflation.

Some cabinet members from Khyber-Pakhtunkhwa objected to bringing the mini-budget after the Pakistan Tehreek-e-Insaf faced defeat in the local bodies’ elections.

“As per law, once the cabinet approves the budget, it has to be transmitted to the National Assembly without delay. Since there was no NA session, it was deferred,” Fawad Chaudhry told The Express Tribune when asked about the reason behind deferring the mini-budget.

It was the second time in the past one week that the federal cabinet did not approve the mini-budget.

According to Fawad Chaudhary, Information Minister the mini-budget would be approved within this week by calling a special cabinet meeting. However, sources said the ruling party was facing two major challenges – how to justify unleashing second round of inflation by imposing 17% sales tax on 144 items – ranging from contraceptives to children’s milk, red chilies and salt. The other items include all dairy products, imported vegetables and food items sold at bakeries.

Secondly, the government is facing is convincing the National Assembly members from the PTI and allies to vote for the highly inflationary budget.

Sources said the government may still try to convene a special cabinet meeting on Thursday to approve the budget and then present it in the National Assembly the same day.

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