IMF asks Pakistan to revise budget as deadline looms

ISLAMABAD: The International Monetary Fund (IMF) has asked Pakistan to revise the budgetary framework for 2023-24 before its passage from the parliament in order to strike a staff-level agreement.

Without changes in the budget, the staff-level agreement with the IMF cannot be achieved, the Fund added.

In the last-ditch effort, Pakistan and the IMF are making efforts to evolve a broader agreement on the budgetary framework which, if struck, could pave the way for approval of the budget for 2023-24 with revisions, including jacking up the FBR’s tax collection target and slashing expenditures.

“The Pakistani side shared the revised budgetary estimates for next fiscal year with the IMF but so far a broader agreement is yet to be achieved,” said a top official, who is privy to the ongoing negotiations between Pakistan and the IMF held virtually from Islamabad and Washington on Friday. That’s why the windup speech of the Minister for Finance was delayed; earlier it was expected to be held on Friday. Now it might be done on Saturday (today) or on Monday.

In the aftermath of Prime Minister Shehbaz Sharif’s meeting with the IMF’s MD in Paris, Pakistan and the IMF held two rounds of virtual talks in the last 24 hours in an effort to move towards a staff-level agreement.

Although, the Pakistani authorities shared revised budgetary estimates for the next fiscal year with the IMF review mission with expectations to evolve a broader agreement on the budgetary framework, it is yet to be seen to what extent both sides reconcile their differences and evolve a consensus on major thorny issues.

Minister for Finance Ishaq Dar was expected to give his windup speech in the National Assembly today (Saturday) as the finalized Finance Bill for 2023-24 was expected to be tabled before it but there were chances that it might be delayed till Monday.

“In the last two rounds of virtual talks held on Thursday and Friday nights, Pakistan and the IMF held hours-long discussion in which Islamabad presented a revised budgetary framework to the IMF. But so far, a broader agreement could not be achieved till mid-night Friday,” top official sources told The News. The talks might yield positive results and both sides could move towards striking an agreement. The ongoing IMF programme under the $6.7 billion Extended Fund Facility (EFF) is going to conclude on June 30, 2023.

The IMF had mentioned three major outstanding issues, including the budgetary framework for its failure to broaden tax base, doing away with tax expenditures, provision of tax amnesty scheme, external financing gap and market-based exchange rate. On the budgetary framework, the government will have to achieve a primary surplus, jack up the FBR’s tax collection target, rationalize non-tax revenue target and slash expenditures.

When contacted, an official said that there were hectic efforts going on in the last 24 hours with hopes for some positive outcome. But so far it is premature to jump to any conclusion, he said and added that there was no luxury of more time, so talks might move towards the end very soon. The latest round of talks continued till midnight at the time of filing of this story. When this scribe sent out questions to top officials, they said that talks were going on till 12.40am Saturday.