- FinMin Ishaq Dar believes budget will help unlock IMF deal.
- “There is nothing in the budget which is objectionable.”
- “We have to keep inflation in mind and people’s problems.”
Finance Minister Ishaq Dar said Thursday that the coalition government has shared its budget numbers with the International Monetary Fund (IMF), hoping to unlock the ninth review as there are “no issues in the numbers”.
The government is under enormous pressure from the IMF to tighten the purse strings to unlock another last tranche of a vital bailout package.
Under the IMF’s terms, Pakistan had to do away with subsidies on energy and other sectors, allow the rupee to float against the US dollar, raise taxes and duties, and restrict imports.
“Prime Minister [Shehbaz Sharif] agreed to give the numbers. I wasn’t ready at first. They are the same numbers we’ll share with you. There is nothing in the budget which is objectionable,” Dar said.
His comments came as he unveiled the Economic Survey for the outgoing fiscal year 2022-23, which showed that Pakistan had failed to meet any economic growth targets.
Pakistan has to satisfy the International Monetary Fund (IMF) on three counts, starting with a budget to be presented on Friday, before its board will review whether to release at least some of the $2.5 billion still to be disbursed under a lending programme that will expire at the end of this month, an official said.
Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said on Thursday that there was only time for one last IMF board review before the scheduled end of the $6.5 billion Extended Fund Facility (EFF).
“As communicated to the authorities, there can be one remaining Board meeting under the current EFF at end-June,” Ruiz said in an email response to Reuters.
“To pave the way for a final review under the current EFF, it is essential to restore the proper functioning of the FX market, pass an FY24 budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6 billion gap ahead of the Board,” she added.
The finance minister, backing his claim of the numbers not being objectionable, said the government is not planning on providing any subsidies.
He said to achieve a GDP growth of 3.5%, the government aims at decreasing the fiscal deficit in the budget and increasing growth and revenue.
To a question, he noted that although the government needs to move towards growth, it needs to address the problems of the masses, especially inflation.
“We, obviously, have to keep inflation in mind and the people’s problems,” Dar said, while noting he would try to do everything in his power to provide relief to the commoners.
Inflation has rocketed, the rupee has plummeted and the country can no longer afford imports, causing a severe decline in the industry.
Pakistan’s economy has been stricken by a balance-of-payments crisis as it attempts to service high levels of external debt, while months of political chaos have scared off potential foreign investment.
The grim data gives the cash-strapped government little room to introduce populist vote-attracting measures in Friday’s budget ahead of an election due to be held in October.
But Dar vowed that Pakistan was on the path towards recovery and that the coalition partners had sacrificed their political capital to ensure the country remains afloat.
“It was extremely challenging for the government to carry out such strict reforms and we had a political cost,” Dar said.
“But I believe it was worth it as Pakistan’s credibility eroded. We took several steps to correct this path,” said the minister.
“I am hoping that when the IMF programme completes, we have two payments in the line — $450 million from World Bank and $250 million from AIIB.”
“We have averted looming default for now.”
— Additional input from AFP
