No mini-budget needed, says minister

Pakistan's Investment Minister Qaiser Sheikh said on Thursday that there was no need to bring a mini-budget for meeting flood-related expenses after the chief executive of a leading United Kingdom health company urged the government to ensure stability in taxation policies.

"We do not need to have a mini budget, and the government is trying to manage the additional spending requirements from within the budget," said Sheikh, Federal Minister for Investment. He was responding to a question during the launch of a report on the economic impact of Haleon in pakistan, a subsidiary of the UK's Haleon.

The minister's statement came at a time when the government was planning to introduce a Flood Levy Bill in Parliament just three months after the approval of the budget. The mini-budget proposals mark clear contradictory taxation policies, as the government plans to impose a flood levy on imported goods in lieu of reducing the regulatory duty in the budget.

The new bill under consideration aims to impose taxes on electronic goods, tobacco, cars, and other imported items to raise funds for flood-affected areas. However, it shows inconsistencies in economic policies that hurt both existing and new investments.

"Every budget session should not be a guessing game for businesses. There is a need to bring stability in policies," said Qawi Naseer, the CEO of Haleon Pakistan.

Qawi added that investment requires stability of thought and policy; while acknowledging the stability the government has so far brought to the economy. He said that during the 2022 economic crisis, Haleon made a $12 million investment, consolidating the company's position.

Pakistan needs to enhance exports after stabilising the economy, said Bilal Azhar Kayani, the Minister of State for Finance, while speaking at the occasion. "Time is ticking and only two years are left in the completion of the International Monetary Fund (IMF) programme," Kayani added.

However, so far, the government has been unable to enhance exports, which remained stagnant at a little over $5 billion during the first two months of this fiscal year. Remittances remain an important source to meet external financing needs, but pressure on the exchange rate market could undermine the regular flow of remittances through banking channels.

Kayani said the government has proven its commitment to reforms by adopting a drastic tariff liberalisation policy that will eliminate regulatory duty and additional customs duty in five years. He noted that during the first year of trade liberalisation, the government reduced duties on raw materials and primary goods.

He added that as part of the reforms, the government will privatise three power distribution companies and Pakistan International Airlines (PIA) within this fiscal year.

The federal minister for investment said Pakistan's economy has stabilised and the companies that left during the economic crisis must now be regretting their decision to leave. He added that Pakistan is open for business, and the government looks to investors who share its commitment to long-term sustainability, knowledge-sharing, capacity-building, and social progress.

Senior Research Economist Afia Malik said Pakistan needs to do much more to provide clarity about laws and predictability in policies to attract investment. She emphasised the need for stable taxation policies, contract enforcement, and investment protection.