Pakistan to receive $1.4bn from multilateral lenders in FY24

September 29, 2023 (MLN): Pakistan is expected to receive a cumulative sum of $1.4 billion from the International Monetary Fund (IMF), World Bank, and Islamic Development Bank (IsDB) in the current fiscal year 2024.

According to details provided by the Caretaker Finance Minister, Dr Shamshad Akhtar, out of the total funds of $1.4bn, $700 million is expected from the IMF, $450m from the World Bank, and the remaining $250m will be disbursed by the IsDB.

She further highlighted that the country has requested support from China and Saudi Arabia to meet its external financing gap.

Moreover, the government has requested Saudi Arabia to increase the oil deferred facility to reduce pressure for external payments.

In FY24, the current deficit is expected to be around $6bn, with a financing requirement of approximately $20bn.

The country reached a Staff-Level Agreement with the IMF on June 30, 2023, and according to the standards set by the fund, providing subsidies is not permissible.

Dr Shamshad Akhtar pointed out that countries with $400bn in reserves can afford subsidies.

It is important to note that during the previous year, subsidies worth Rs1,300 billion were provided to various sectors to support development.

While addressing issues related to tax collection, the caretaker finance minister stressed the importance of establishing a tax division, pointing to the significant backlog of pending tax cases, amounting to around Rs 3 trillion.

“Taxation on real estate and agriculture is important and should not be imposed without consulting the provinces,” she added.

Tax imposition on the retail sector can be phased out, but the tax on immovable property needs to be reviewed. The provinces have been instructed to cut their spending and to use their funds efficiently.

Accordingly, the Benazir Income Support Programme (BISP) will be handed over to the provinces as part of the IMF program.

The finance minister further stated that the ongoing crackdown against speculators, hoarders, and smugglers is expected to continue.

As part of this initiative, the State Bank of Pakistan (SBP) suspended the authorization of four exchange companies in September, underscoring the central bank's commitment to ensuring compliance with regulatory standards.

Due to improved transparency, the Pakistani Rupee (PKR) appreciated by around 18 rupees in the interbank market and 34 rupees in the open market against the USD in September.

Dr Shamshad Akhtar highlighted the success of reforms in curbing illegal dollar outflows and channelling individuals toward formal avenues. 

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