Take parliament into confidence before raising taxes: Pakistan President Alvi

Islamabad: Pakistan President Arif Alvi on Tuesday asked finance minister Ishaq Dar to take the parliament into confidence before passing an ordinance to raise taxes to the tune of Rs 170 billion, further complicating the cash-strapped country's desperate attempts to secure the much-needed IMF bailout package.

Pakistan held intensive talks with an International Monetary Fund (IMF) delegation here for ten days that ended on February 9.

A deal, however, could not be reached.

Despite Pakistan bending its back to the limits, the IMF has refused to release the next tranche of USD 1.1 billion out of USD 7 billion programme initially agreed upon in 2019 unless certain terms are met.

One of these terms include raising taxes to the tune of Rs 170 billion.

During a meeting with President Alvi, finance minister Dar said the government wanted to raise Rs 170 billion by June this year as taxes, needed for the IMF bailout package.

Alvi “advised it would be more appropriate to take the Parliament into confidence on this important subject” and that a session should be called immediately so that the bill can be enacted without delay, according to the finance ministry.

Alvi belongs to the opposition Pakistan Tehreek-e-Insaf (PTI) party and his consent is necessary for any ordinance.

Going through the parliament would take days to pass the ordinance and further complicate the financial health of the Pakistan and potentially scupper the IMF deal.

Meanwhile, the IMF and the Pakistan government resumed talks virtually on Monday, with Islamabad hoping that an agreement would be quickly reached so that it would bring much-needed relief to the country's ailing economy.

With the foreign reserves plummeting to a critical low of just USD 2 billion, sufficient for just 10 days of imports, Pakistan is looking towards the IMF to resuscitate its economy.

Pakistan is struggling with instability stemming from an economic crisis, last summer's devastating floods, and a recent surge in terror attacks across the country.

The Pakistani economy faces substantial credit risks with "critically low levels” of foreign exchange reserves, New York-based global ratings agency Fitch said on Tuesday, warning that a default is a "real possibility." Fitch downgraded Pakistan’s long-term foreign currency issuer default rating (IDR) to ‘CCC-’ from ‘CCC+’, citing further worsening in liquidity and policy risks.

The move reflected a sharp deterioration in external liquidity and funding conditions, along with decline of foreign exchange (FX) reserves to “critically low levels," Fitch added.