Karachi:
Pakistan’s government will present its annual budget to parliament on Friday to appease the IMF for any chance of releasing more bailout money as the crisis-plagued country is due to hold elections in November.
The risk of sovereign debt default is rising as the economy is creaking under double deficits and record high inflation, further tarnishing the popularity of Prime Minister Shehbaz Sharif’s coalition ahead of the vote.
The economy could slide closer to the brink as a result of the latest period of political instability, with former Prime Minister Imran Khan, the main opposition leader, engaged in a dangerous battle with the country’s powerful military.
Against the backdrop of this political drama, Finance Minister Ishaq Dar will deliver his budget speech to parliament after 4pm (11am GMT) on Friday.
Some budget figures were released earlier this week, including development spending of 1,150 billion Pakistani rupees ($4 billion) and an economic growth target of 3.5% for the coming fiscal year.
Sources have also told Reuters that preliminary budget proposals projected a budget deficit of 7.7% of GDP, with total spending of 14.5 trillion Pakistani rupees ($50.7 billion) and revenue collection of 9.2 trillion Pakistani rupees ($32. 2 billion). The proposals also set an inflation target of 21%, well below the record high of nearly 38% inflation in May.
The International Monetary Fund said on Thursday it has discussed the budget with Pakistan.
Sharif’s government hopes to persuade the IMF to release at least part of the remaining $2.5 billion in a $6.5 billion program Pakistan introduced in 2019, which expires at the end of this month.
“The focus of the FY24 budget discussions is to balance the need to strengthen the outlook for debt sustainability while creating room to increase social spending,” said Esther Perez Ruiz , the IMF’s representative for Pakistan, Thursday.
Pakistan missed almost all of its economic targets set in the latest budget, most notably its growth target, which was initially set at 5% but was revised to 2% earlier this year. Growth is now expected to be just 0.29% for the fiscal year ending June 30.
Foreign exchange reserves have fallen below $4 billion, according to data released by the central bank on Thursday, enough to barely cover a month’s worth of imports.
The government has no fiscal room to take popular measures to win votes or provide a stimulus to fuel declining economic activity, with short-term revenue-generating opportunities limited and domestic and international debt obligations continuing to mount.
Sharif’s coalition could provide some consolation for the troubles surrounding opposition leader Khan, whose party has suffered a string of defections of key leaders following a crackdown by the military.
Khan was ousted in a parliamentary confidence vote last year, but polls show he remains Pakistan’s most popular politician. He is now battling numerous lawsuits, ranging from corruption to sedition and complicity in murder, which could lead to him being barred from running in the elections.
(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)
