In a last-ditch effort to secure a stalled rescue package from the International Monetary Fund (IMF), the government has agreed to make several adjustments to its fiscal year 2024 budget, announced Finance Minister Ishaq Dar on the floor of the National Assembly.
“Pakistan and the IMF had detailed negotiations as a last effort to complete the pending review,” he told lawmakers on Saturday.
The government will raise another Rs215 billion in new taxes and slash Rs85 billion in spending for the fiscal year beginning next month, as well as a variety of other measures to reduce the fiscal imbalance, according to the finance czar.
The review was conducted a day after Prime Minister Shehbaz Sharif met with IMF Managing Director Kristalina Georgieva on the sidelines of the Global Financing Summit in Paris.
There is just a week left before the IMF’s 2019 Extended Fund Facility (EFF) expires on June 30.
Pakistan has been attempting to acquire $1.1 billion in funds under the $6.5 billion facility’s ninth review, which was negotiated earlier this year.
Dar explained, “Pakistan has agreed on Rs215 billion taxes after three-day parleys with IMF officials to complete the 9th review under the EFF, which has been pending due to the country’s external financing gap.”
“As a result of the talks with the IMF, for the fiscal year 2023-24, the final taxes of only Rs215 have been agreed, ensuring that it will not burden the poor and middle segments of the society,” he said while winding up general discussion on the budget for the year 2023-24.
Pakistan, he further said, would bring down the running expenditure by Rs85 billion, which would have no impact on the proposed development budget, the raise in salaries, and the pensions of the federal government employees.
He said the government held talks with the Washington-based lender with complete sincerity and assured the parliament that once the things with the international lender were settled; all details would be made public by placing the agreement on the official website of the Ministry of Finance.
He stated that the government undertook sincere conversations with the Washington-based lender and informed the parliament that if the issues with the foreign lender were resolved, all details will be made public by posting the agreement on the Ministry of Finance’s official website.
As a result, he stated that the proposed tax collection target of the Federal Board of Revenue (FBR) had been increased from Rs9.2 trillion to Rs9.415 trillion, with the provincial share increasing from Rs5.276 trillion to Rs5.390 trillion, the federal government total expenditure estimate increasing from Rs14.460 trillion to Rs14.480 trillion, and the pension estimate increasing from Rs761 billion to Rs801 billion.
Similarly, he stated that the subsidy estimate would be Rs1.064 trillion and grants would be Rs1.405 trillion and that as a result of all of these steps, the overall budget deficit would be reduced by Rs300 billion [Rs215 billion in taxes and Rs85 billion in running costs].