FM hopes upcoming IMF program will be final one

June 25, 2024 (MLN): The currently sought extended and larger International Monetary Fund (IMF) program might be the last one from the global lender, after which Pakistan would sail towards the path of development, Finance Minister Muhammad Aurangzeb stated during a speech on the FY25 budget today.

Pakistan signed the initial $3 billion long-standing Staff Level Agreement (SLA) with IMF on June 30, 2024.

The 9-month SBA provided a policy anchor to the country and helped to overcome its obstacles up to a certain extent.

However, to fully stabilize and operate within a secure economic zone, the government is making all necessary efforts to obtain an extended program worth around $6 to $8bn.

The efforts appeared during the period of the SBA and became more prominent in the newly released budget for FY25 which focuses on kicking down the fiscal deficit with enhanced revenue measures.

The government unveiled the tax-heavy budget on June 12, introducing higher taxes on the salaried class, increased levies, enhanced FED, and revamps of various tax rates and their computations.

The goal through this is to achieve a tax revenue target of Rs12.97 trillion, which is around 40.2% higher compared to the revised estimates of Rs9.252tr for the current fiscal year (FY24). Meanwhile, the non-tax revenue is projected at Rs4.845tr, reflecting an estimated increase of 64.4% compared to FY24.

Certain well-reputed agencies have pushed their hopes of strengthened prospects for an IMF deal.

However, Fitch warned that it is uncertain whether fiscal targets will be hit.

Nonetheless, even assuming only partial implementation of the budget, we forecast the fiscal deficit will narrow, it added.

Moody's Ratings also expressed its views that the budget will likely support Pakistan’s ongoing negotiations with the IMF.

What necessitates this program is the immense need to boost foreign exchange reserves and retain the confidence of other bilateral and multilateral partners to meet external financing needs.

Meanwhile, the Finance Minister expressed optimism today that this would be the last IMF program, as through this, the country is likely to sail its economic ship balanced and secured.

Muhammad Aurangzeb made these remarks while addressing the National Assembly to wind up the Federal Budget 2024-25 discussions.

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