July 03, 2024 (MLN): Pakistan is looking to clinch a staff level agreement on an International Monetary Fund bailout of more than $6 billion this month after addressing all of the lender's requirements in its annual budget, Reuters reported, citing Pakistan's junior finance minister.
The South Asian country has set challenging revenue targets in its annual budget to help it win approval from the IMF for a loan to stave off another economic meltdown, even as domestic anger rises at new taxation measures.
"We hope to culminate this (IMF) process in the next three to four weeks," Minister of State for Finance, Revenue and Power Ali Pervaiz Malik said on Wednesday, with the aim of thrashing out a staff level agreement before the IMF board recess.
"I think it will be north of $6 billion," he said of the size of the package, though he added at this point the IMF's validation was primary focus.
The IMF did not respond immediately to a request for comment, Reuters said.
Pakistan has set a tax revenue target of Rs13 trillion ($47bn) for the fiscal year that began on July 01, a near-40% jump from the prior year, and a sharp drop in its fiscal deficit to 5.9% of gross domestic product from 7.4% the previous year.
Malik said the point of pushing out a tough and unpopular budget was to use it a stepping stone for an IMF programme, adding the lender was satisfied with the revenue measures taken, based on their talks.
"There are no major issues left to address, now that all major prior actions have been met, the budget being one of them," Malik said.
While the budget may win approval from the IMF, it could fuel public anger, according to analysts.
"Obviously they (budget reforms) are burdensome for the local economy but the IMF program is all about stabilisation," Malik said.
Sakib Sherani, an economist who heads private firm Macro Economic Insights, said a quick deal with the IMF was needed to avoid pressure on Pakistan's foreign exchange reserves and the currency given the country's maturing debt repayments and the effects of unwinding of capital and import controls that were applied earlier.
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Posted on: 2024-07-03T12:37:24+05:00
