The Pakistan government is set to present its annual budget to Parliament later on Friday, aiming to meet the requirements of the International Monetary Fund (IMF) in order to potentially secure the release of additional bailout funds.
The risk of default on sovereign debt is rising, with the economy creaking under twin deficits and record high inflation, which has further dented the popularity of Prime Minister Shehbaz Sharif’s coalition, reports Dawn.
The federal cabinet meeting for the approval of the budget is scheduled for 3pm and Finance Minister Ishaq Dar is set to deliver his budget speech to Parliament after 4pm.
Some budget figures were announced earlier this week, including development spending of Rs1.15 trillion ($4 billion), and an economic growth target of 3.5 per cent for the coming fiscal year.
Sources have also told Reuters that preliminary budget proposals envisaged a fiscal deficit of 7.7pc of GDP, with total spending at Rs14.5 trillion ($50.7 billion) and revenue collection at Rs9.2 trillion ($32.2 billion).
The proposals also set an inflation target of 21 per cent, well below the record high of nearly 38 per cent inflation recorded in May.
On Thursday, the IMF said that it has been discussing the budget with the government.
The coalition government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month.
“The focus of discussions over the FY24 budget is to balance the need to strengthen debt sustainability prospects while creating space to increase social spending,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said on Thursday.
The country missed almost all of its economic targets set in the last budget, most notably its growth target, which was initially set at 5 per cent, revised down to 2 per cent earlier this year. Growth is now projected to be just 0.29 per cent for the fiscal year ending June 30.
Foreign exchange reserves have dipped below $4 billion, according to data released by the State Bank of Pakistan (SBP) on Thursday, enough to cover barely a month of imports.
The government has no fiscal space to introduce popular measures that will win its votes or a stimulus to spur flagging economic activity, with limited avenues for raising revenue in the short term and domestic and international debt obligations continuing to mount.
