The International Monetary Fund (IMF) has told the Government of Pakistan to narrow the budget deficit down to 4.9 percent of the GDP for the next fiscal year. This is to achieve fiscal stability by reducing expenditures and increasing revenue for the revival of the stalled Fund program.

This was revealed by well-informed sources in the Ministry of Finance who also told ProPakistani that the budget preparations are hinging on the tough conditions set by the IMF for the revival of the loan program that will unlock a tranche of $1 billion.

The IMF is pressing Pakistan to increase the revenue collection target to Rs.7.5 trillion for the next fiscal year. The country’s revenue collection is expected to be marginally over Rs. 6 trillion during the current fiscal year.

The credit agency has also told Pakistan to decrease expenditures by reducing subsidies, remove exemptions and development funds for the next fiscal year, the sources said.

The Federal Board of Revenue (FBR) will have to collect additional taxes of Rs. 1,200 to Rs. 1,500 billion in the next fiscal year to make the fiscal framework sustainable and prudent in line with the IMF’s conditions.

The IMF has also instructed the government to reduce the Public Sector Development Program (PSDP) from Rs. 900 billion for the current fiscal year to Rs. 800 billion for the next fiscal year.

The government has utilized only Rs. 423 billion from the total PSDP allocation during the first 10 months of the current fiscal year due to a shortage of resources.

The government will find it difficult to increase salaries and pensions in the upcoming budget as it is under pressure from the IMF to reduce the overall expenditures.

The announcement of the budget for the fiscal year 2022-23 aligned with the IMF’s policies will set the stage for a stabilization path and the government will have to take tough decisions in this regard in the coming days.

Source: Pro Pakistani