Finance Minister Ishaq Dar announced that the Board of the China Development Bank (CDB) has approved a loan of $700 million for Pakistan in order to stabilize the economy.
Finance Minister Ishaq Dar while taking to his Twitter announces this news and said: “This amount is expected to be received this week by State Bank of Pakistan which will shore up its forex reserves”.
Pakistan is close to reaching an agreement with the International Monetary Fund (IMF) that would not only lead to the issuance of $1.2bn but also unlock aid from friendly countries.
Both International Monetary Fund (IMF) and Pakistan moved closer to the revival of the $7 billion Extended Fund Facility (EFF) as the lender responded to the Memorandum of Economic and Financial Policies (MEFP) draft.
Finance Ministry Sources claim that the staff-level agreement between the IMF and the government is expected next week. After which is expected that IMF will issue the Loan to the State Bank of Pakistan.
Earlier, National Assembly unanimously approved the government’s Finance (Supplementary) Bill 2023 or ‘mini-budget’ in order to avail $1.1 billion tranche of the International Monetary Fund (IMF) loan.
The NA passed the Finance (Supplementary) Bill 2023, proposing additional taxes and duties of Rs170 billion to meet the IMF conditions for the revival of the Extended Fund Facility (EFF).
Under the finance supplementary bill, the government decided to increase the General Sales Tax (GST) from 17 percent to 18 percent. People will also have to pay more for business-class air travel, wedding halls, mobile phones, and sunglasses. It has been decided to hike the GST on luxury items from 17 percent to 25 percent.
‘Mini-Budget’
Last week Federal Finance Minister Ishaq Dar introduced the Finance Bill (Supplementary) the “mini-budget” in the National Assembly in order to meet IMF Conditions for the approval of the loan program needed to avoid a default.
While addressing the Parliament, the finance minister compared the performance of the previous PML-N and PTI governments.
The finance minister also announces to increase General Sales Tax GST rate from 17 to 18% and increasing the Federal Excise Duty (FED) on cigarettes and Tobacco in order to fetch an additional Rs115 billion out of Rs170 billion agreed to by Pakistan in line with the IMF conditions.
Mini-budget proposals
- Govt has increased GST on luxury items from 17% to 25%
- Increase in federal excise duty on cigarettes and fizzy drinks.
- Increase in federal excise duty on cement
- GST has been increased from 17pc to 18pc
- Benazir Income Support Programme (BISP) handouts increased to Rs400bn from Rs360bn
- FDE on business and first-class air tickets to now be Rs20,000 or 50% — whichever is higher
- GST is to not be imposed on essential goods.
