The IMF has raised several issues in Pakistan’s budget for the fiscal year 2023-24, calling it a missed opportunity but vowing to work with the cash-strapped country to refine the budget before it is passed in parliament. expressed his readiness. The government unveiled a 14.4 trillion budget for 2023-24 in the National Assembly last week as it struggled to prevent a looming default due to a shortfall in foreign exchange reserves.
A day before it was to be tabled, the IMF’s Resident Representative for Pakistan, Esther Perez Ruiz, said Pakistan needed to satisfy the Washington-based lender on three counts, including the budget for the upcoming fiscal year. Before the board reviews whether to issue at least something. The disbursement of USD 2.5 billion under the 2019 Extended Fund Facility (EFF) is due to end at the end of June.
In a statement late Wednesday, Ruiz said a new tax waiver scheme proposed by the government in the budget sets a “damaging precedent” and runs against the terms of the program, Dawn newspaper reported. The statement did not specify which particular scheme the fund was referring to.
It also notes that the draft FY24 budget “misses an opportunity to broaden the tax base in a more progressive manner, and the long list of new tax outlays further undermines the fairness of the tax system and more support for the weakened BISP”. reduces the resources needed for (Benazir Income Support Program) recipients and development spending”.
Ruiz further said measures to address the energy sector’s liquidity pressures could be included with the broader budget strategy, the report said. The IMF official had earlier pointed out that the lender only had time for one board meeting before the current program ends.
Ruiz said the IMF is engaged in discussing policies to maintain stability, and “it stands ready to work with the government in refining this budget prior to its passage”.
With reserves at significant levels for the past several months, Pakistan was expected to receive around USD 1.2 billion from the IMF in October last year as part of the EFF’s ninth review. But nearly eight months later, that tranche has not materialized because the fund says Pakistan has been unable to meet key prerequisites.
Pakistan’s efforts to unlock access to a previously agreed USD 6.5 billion loan package are in jeopardy as the budget needs to satisfy global lenders to secure more bailout funds for the cash-strapped country.
Weeks away from its completion, the ninth review of the program is still in limbo, while the tenth review, which was originally part of the plan, is out of question, according to reports. It is feared that without the active support of the Fund, Pakistan may default on external financing commitments.
Pakistan’s economy has been in a state of steady decline for the past several years, putting untold pressure on the poor population in the form of rampant inflation, which has made survival almost impossible for a large number of people.
(With PTI inputs)
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