Abu Dhabi, UAEMonday 21 October 2019

Pakistan's Imran Khan announces austere first budget ahead of IMF bailout

The government has said it will dramatically increase tax revenues amid a flagging economy

Pakistan's Prime Minster and former Cricket star Imran Khan has taken to social media to offer his tips for a successful match for the Pakistan national team. EPA
Pakistan's Prime Minster and former Cricket star Imran Khan has taken to social media to offer his tips for a successful match for the Pakistan national team. EPA

Imran Khan's financially beleaguered government has said it will dramatically raise tax revenue as it set out an austere first budget to win over the International Monetary Fund ahead of a bailout.

Pakistan will aim to collect more than 26 per cent more than last year as the government tries to reduce its reliance on borrowing.

The first federal budget from the ruling Pakistan Tehreeik-e-Insaf introduced a tax revenue target of Rs5.55 trillion (DH134 billion) for the next 12 months, up from the Rs4.4 target in last year's budget

The budget came 24 hours after bleak economic figures painted a dismal picture of Pakistan's finances, with Mr Khan's government presiding over a quickly decelerating economy. Growth for the current financial year has been put at 3.3 per cent – barely half the target.

It both raised individual taxes and set out measures to try to widen the tax net and get more people to pay – only roughly one per cent of Pakistani's currently pay tax.

Mr Khan inherited a looming financial crisis when he was elected last year, but the picture has become even more bleak during the first 12 months of his stewardship.

The country faces a severe balance of payments crisis and has reached a tentative deal with the IMF for a US$6b (Dh22b) loan. That loan, which has yet to be agreed by the Washington-based lender's board, comes with recommended spending curbs and debt control among its terms.

Rising prices are already causing domestic pain, with inflation close to 10 per cent and the rupee has devalued several times. Pakistan's opposition said it will try to capitalise on resentment over the worsening economic conditions, which are squeezing many of the middle class who voted for Mr Khan.

The budget was delivered on the floor of the National Assembly of Pakistan in Islamabad in an unruly session after two days of political drama.

Opposition figures held placards and protested as the government read out the budget measures.

Earlier in the day, a court handed over the country's former president to a national anti-graft body for questioning over a multimillion dollar money laundering case.

Asif Ali Zardari, the widower of former prime minister Benazir Bhutto, will be held for ten days pending investigation on corruption charges.

Mr Zardari and his sister are accused of holding bogus bank accounts to launder money, but both deny wrongdoing. His opposition Pakistan Peoples Party claim the charges are politically motivated – opposition leaders have recently faced a barrage of corruption investigations. On Tuesday, the same anti-corruption body arrested Hamza Shahbaz, a politician who is the son of the opposition leader Shahbaz Sharif.

Meanwhile, Scotland Yard arrested Altaf Hussain on Tuesday, the self-exiled leader of one of Pakistan's most prominent political parties.

Pakistan had sought the arrest of the Muttahida Qaumi Movement founder since a televised speech in August 2016 condemning the country's politically influential army, state-run media reported.

It was not immediately clear why British authorities had detained Mr Hussain now. London police said in a statement that the investigation was ongoing.

Updated: June 11, 2019 09:10 PM

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