IMF Raises Serious Objections on Pakistan’s Budget 2023-24

The International Monetary Fund (IMF) has raised serious objections to the federal budget for fiscal year 2023-24. The Fund has also objected to the proposed new tax amnesty in the budget while saying it runs against the program’s conditionality and governance agenda and creates a damaging precedent Esther Perez Ruiz, IMF Resident Representative in Pakistan told ProPakistani that Staff remains engaged to discuss policies to maintain stability. However, the draft fiscal year 2024 Budget misses an opportunity to broaden the tax base in a more progressive way, and the long list of new tax expenditures reduces further the fairness of the tax system and undercuts the resources needed for greater support for vulnerable BISP recipients and development spending. “The new tax amnesty runs against the program’s conditionality and governance agenda and creates a damaging precedent. Measures to address the energy sector’s liquidity pressures could be included alongside the broader budget strategy. The IMF team stands ready to work with the government in refining this Budget ahead of its passage,” added Esther. The view of Washington-based lender comes as Pakistan scrambles to secure dollar inflows. The central bank’s reserves have slipped to precarious levels and are expected to decline further, as the IMF program remains blocked since November last year. Debt restructuring talks are heating up, and Finance Minister Dar has sought to calm markets multiple times, emphasizing the government’s stance of completing all obligations on time. Pertinently, Pakistan needs to satisfy the IMF on three counts: restoring the proper functioning of the foreign exchange market, passing a budget consistent with program objectives, and securing credible financing commitments to close the $6 billion financing gap before the lender’s Executive Board meeting. As of today, Pakistan is not on the agenda of the IMF Executive Board.