Saul Loeb—AFP
Additional measures will be needed to bring Pakistan’s budget for the upcoming fiscal in line with key objectives of its International Monetary Fund (IMF) program, the lender’s resident representative in Islamabad said on Monday.
“Our preliminary estimate is that additional measures will be needed to strengthen the budget and bring it in line with key program objectives,” Esther Perez Ruiz told the Reuters news agency. “Discussions with the authorities continue to obtain more clarity on certain revenue and spending items and allow for a full assessment,” she said, adding that the fund was ready to continue to support authorities’ efforts and the implementation of policies to promote macroeconomic stability.
Last week, Pakistan unveiled a Rs. 9.5 trillion budget for fiscal year 2022-23, with Finance Minister Miftah Ismail saying it was aimed at reducing expenditures and putting the economy back on the path to macroeconomic stability. The budget’s approval by the IMF is key for the lender to revive a much-needed bailout program that was suspended earlier this year.
Speaking with private broadcaster Geo News on Monday night, he warned that all subsidies on fuel products would need to end to avoid default. This has long been a demand of the IMF, which has maintained that the full impact of international prices should be passed onto consumers.
If Pakistan is able to satisfy the IMF, it would release a tranche of $900 million to the country. While this fund is insufficient to meet the country’s foreign exchange needs, it would enable Islamabad to secure further support from other lenders and allied nations. According to the State Bank of Pakistan, Pakistan’s foreign exchange reserves currently stand at $9.2 billion—barely enough for 45 days of imports.