Pakistan has successfully met all requirements set by the International Monetary Fund (IMF) in its annual budget, aiming to secure a bailout package exceeding $6 billion to stabilize its economy and avert a financial crisis. The ambitious revenue targets set in the budget are seen as crucial in gaining IMF approval, despite facing domestic resistance over new taxation measures.
Minister of State for Finance, Revenue, and Power, Ali Pervaiz Malik, expressed confidence in finalizing a staff-level agreement with the IMF within the next few weeks. The agreement, crucial for Pakistan’s economic stability, focuses on fiscal reforms and revenue enhancements to reduce the fiscal deficit and boost tax revenues significantly.
“We expect the IMF to approve a package north of $6 billion,” Malik stated, emphasizing the IMF’s validation as the primary goal at this stage. The IMF has acknowledged Pakistan’s efforts in meeting major prior actions, including stringent budgetary measures, paving the way for further negotiations.
Pakistan has set an ambitious tax revenue target of 13 trillion rupees ($47 billion) for the current fiscal year, representing a nearly 40% increase from the previous year. Additionally, the country aims to reduce its fiscal deficit to 5.9% of GDP, down from 7.4% in the previous fiscal year.
While these fiscal reforms are crucial for IMF approval, they have sparked public discontent due to their potential economic burdens. Analysts warn of potential social and economic repercussions, despite acknowledging the necessity of stabilizing Pakistan’s economy through the IMF program.
Economists stress the urgency of finalizing the IMF deal to prevent further pressure on Pakistan’s foreign exchange reserves and currency stability amidst debt repayments and economic challenges. The country’s stock market has shown resilience, rallying 10% since the budget announcement in anticipation of IMF support.
