The International Monetary Fund (IMF) has set some difficult conditions for Pakistan’s next budget due in the following month, by demanding the cash-strapped country get them approved by Parliament before considering its latest bailout package of $6-8 billion.
However, commentators believe that if a budget is handed down from Washington it will only serve to cause inflation and yet more problems for beleaguered PM Shehbaz Sharif. In fact, we’ll see if the 2024-25 fiscal year’s budget becomes an acid test for Mr. Sharif’s government which can deliver on IMF’s tough conditions.
As a result of recent two-week worth discussion between visiting delegations from the IMF and Pakistani authorities in Islamabad, after forty days has been agreed with Islamabad to complete previous actions including mostly binding parliamentary approvals and legislation. The purpose is to reach a staff level agreement (SLA) for the bailout under IMF’s Extended Fund Facility (EFF).
Officials said that the IMF team indicated what sort of budget they would like to see. “ The govt will have to demonstrate its ability to raise revenues, curtail expenditure and undertake structural reforms to restrict losses of state-owned enterprises. The govt will have to hike electricity and gas tariffs in July and Aug to strike a deal with IMF,” an official source said.
Nathan Porter who leads this mission as well as his subordinates’ work has been over recently regarding pensions, state-owned enterprises ,reforms on gas and power sectors and monetary policy .
One source said: ‘‘Given unpredictable political environment in Pakistan, the IMF is looking at parliamentary approval for reform and policy actions.’’ It was revealed that on Friday, this group of people had already left.
