New budget vital to Pakistan’s IMF alliance

According to a senior official from the International Monetary Fund (IMF), Pakistan has the opportunity to undergo one board review under its current IMF bailout package if the measures outlined in its upcoming budget, scheduled to be revealed on Friday, meet the expectations set by the lender. Pakistan’s IMF program is set to expire this month, with approximately $2.5 billion in funds from three previous reviews yet to be disbursed. The country has been grappling with challenges such as high inflation, fiscal imbalances, and low reserves as it strives to reach an agreement with the IMF.

The successful passage of a budget for the fiscal year 2024 that aligns with the objectives of the IMF program is crucial for initiating the final review under the current bailout package, stated Esther Perez Ruiz, the IMF’s resident representative for Pakistan. She emphasised that the discussions surrounding the FY24 budget primarily focus on striking a balance between strengthening debt sustainability prospects and creating room for increased social spending. Ruiz added that increased social spending would help mitigate the impact of inflation on Pakistan’s most vulnerable citizens, but further progress is necessary in identifying measures to boost revenue and manage expenditure effectively.

Pakistan has been actively engaged in negotiations with the IMF regarding the budget. The country’s government must demonstrate its commitment to implementing the necessary reforms and fiscal measures outlined in the budget in order to secure the remaining funds from the IMF and pave the way for future financial assistance and support. The budget’s alignment with the IMF’s objectives is vital for Pakistan to address its economic challenges and work towards achieving sustainable growth and stability in the long run.