ISLAMABAD: The International Monetary Fund (IMF) estimates that Pakistan’s rising debt might be close to Rs82 trillion by the end of the ongoing financial year ending on June 30, 2024.
The IMF staff has also assessed that the pace of accumulation of total public debt and liabilities would continue to persist, which might go up to Rs92.24 trillion in FY2024-25.
Pakistan and the IMF have struck a staff-level agreement by evolving consensus on the Memorandum of Economic and Financial Policies (MEFP) for presentation before the Fund’s Executive Board for release of $700 million tranche under the $3 billion Standby Arrangement (SBA) program.
The fiscal framework agreed between the two sides showed that the general government and government guaranteed debt, including the IMF’s, was estimated to rise up to Rs81.836 billion till end of June 2024, which stood at Rs77.9 trillion till end of September 2023.
The total public debt and liabilities stood at Rs68 trillion in FY22-23. This data on public debt and liabilities shows that it would go up by Rs11.8 trillion in the current fiscal year.
The total public debt and liabilities would go up manifold mainly because of the rising fiscal deficit and the Fund estimated that fiscal deficit would escalate by Rs8.227 trillion for the current fiscal year, equivalent to 7.8 percent of GDP.
Despite hectic efforts of the government to convince the IMF for projecting lower debt servicing, the IMF did not accept the stance of the government and projected the debt servicing on domestic and external loans standing at Rs8.627 trillion for the current fiscal year.
Ironically, the government will have to manage budget financing to the tune of Rs7.5 trillion through domestic avenues and only Rs1 trillion would be made available as budgetary support from foreign avenues. The IMF also assessed that the debt servicing might escalate up to Rs9.621 trillion for the next fiscal year.
The subsidies amount was kept unchanged at Rs1.39 trillion for the current fiscal year although the government had so far released only Rs2.5 billion during the first quarter of the current fiscal year. The defence spending was also kept unchanged at Rs1.8 trillion for the current fiscal year.
On the fiscal side, the IMF and Pakistani sides agreed to slash the development spending at federal and provincial levels. At the federal level, the development spending was reduced from Rs843 billion to Rs782 billion for the current fiscal year. The government had allocated Rs950 billion for PSDP projects in the current fiscal year. For provincial level development programs, the IMF has projected reduction from Rs1,440 billion to Rs1,325 billion for the current fiscal year.
On the revenues side, the FBR’s target was kept unchanged at Rs9.415 trillion for the current fiscal year. On non-tax revenue side, the IMF and Pakistan agreed to jack up collection on petroleum levy from Rs869 billion to Rs918 billion for the current fiscal year.