ISLAMABAD , June 24, 2023: With Pakistan meeting another International Monetary Fund (IMF) condition by removing all restrictions on imports, there are no end to the do more calls as the world’s lender is pressing the government to revise the budget presented for 2023-24 – the next fiscal year.
The latest report is in line with the clear stance taken earlier by the IMF when expressed dissatisfaction with the budget, with the Washington-based financial institution currently calling for enhancing the revenue collection target, slashing subsidies for power consusmers, reducing expenses and withdrawing the scheme under which the expats are encouraged to bring $100,000 to the country.
“Staff remains engaged to discuss policies to maintain stability. However, the draft FY24 Budget misses an opportunity to broaden the tax base in a more progressive way,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, had said in a text message to Reuters after Finance Minister Ishaq Dar presented the budget.
Read more: Dar says budget growth-oriented, mentions Plan B if no progress made on IMF deal
She added that the long list of new tax expenditures further reduces the fairness of the tax system and undercuts the resources needed for vulnerable recipients in the Benazir Income Support Programme.
Ruiz had said the IMF team was ready to work with the government in refining the budget ahead of its passage.
Now sources say the IMF has asked Pakistan to modify the budgetary framework before the parliament’s approval to reach a staff-level agreement and has told the government that an agreement cannot be reached unless there are changes in the budget.
The sources say both sides are engaged in hectic consultations as the IMF agreement is set to expire in a week on June 30.
Earlier this week, Prime Minister Shehbaz Sharif assured IMF Managing Director Kristalina Georgieva of fulfilling all the requirements under the stalled loan programme, saying releasing the withheld tranche would bring economic stability to Pakistan and provide relief to the people.
He made these remarks during a meeting with the IMF chief on the sidelines of the ‘Summit for New Global Financing Pact’ in the French capital as Pakistan is trying to rescue the IMF deal.
Pakistan has barely enough currency reserves to cover one month’s imports. It had hoped to have $1.1 billion of the funds released in November – but the IMF has insisted on a number of conditions before it makes any more disbursements before the end of the $6.5 billion Extended Fund Facility (EFF).