ISLAMABAD: Sources told JEE News on Sunday that the delay in reaching an agreement with the International Monetary Fund (IMF) has affected the preparation of the budget for the next financial year.
The Budget Strategy Paper (BSP), which was supposed to be approved by the federal cabinet in the second week of April, has not been ready due to the current political and economic uncertainty.
The schedule for delimiting development funds and current expenditure for fiscal year 2024 has also been affected, while the Annual Plan Coordination Committee (APCC) is yet to meet.
Meanwhile, the meeting of the National Economic Council is scheduled to be held in the first week of May.
Sources say that the budget documents will be finalized by the last week of next month for Cabinet approval. The government plans to present the next year’s budget in the first week of June in the cabinet as well as the parliament.
The new budget is expected to be “dictated” by the IMF, the sources said, adding that the Washington-based lender’s budget for tax revenues, fiscal deficit, public sector development program funds and key targets. Approval will be taken.
The government has been in talks with the IMF since November to issue a much-needed economic bailout, without which the country risks default.
The latest loan tranche, if approved, would disburse more than $1 billion to Pakistan and unlock revenues from other multilateral institutions. The amount is part of the $6.5 billion Expanded Fund Facility (EFF) that was agreed in 2019. Pakistan had to complete the measures demanded by the IMF, such as replacing subsidies in the electricity, export and agriculture sectors, increasing energy and fuel tariffs, and permanent electricity surcharges, among other measures. The measures include raising its key policy rate to a record high of 21 percent, adopting a market-based exchange rate, arranging external financing and raising more than 170 billion rupees ($613 million) in new taxes. .
However, despite these steps, a staff-level agreement with the Fund is yet to be signed. The current IMF program ends on June 30, 2023, but the ongoing ninth review is yet to be completed.
The 10th review was scheduled for February 3, 2023, while the last and final 11th review was scheduled for May 3, 2023, less than a week away.
No one knows how the two sides will proceed as the 9th review has not yielded results despite fulfilling all the important conditions.
However, former finance minister Miftah Ismail, among others, has said that the country will need to enter into a new program with the international lender soon after the current program expires due to its deteriorating economic situation.
