The International Monetary Fund (IMF) has asked Pakistan to make changes to its 2023-2024 budget before it is approved by parliament.
The IMF believes that the budget needs to be revised in order to reach a staff-level agreement with Pakistan.
Pakistan and the IMF have been working intensively to reach an agreement on the budget. The IMF has emphasized that the budget cannot be approved without changes.
If the IMF and Pakistan are able to reach an agreement, the revised budget could be approved. This would involve increasing the Federal Board of Revenue’s (FBR) tax collection target and reducing expenses.
The Pakistani side has shared the revised budgetary estimates with the IMF, but a broader agreement has not yet been reached. The windup speech of the finance minister was delayed because of the ongoing negotiations.
Results of Meeting
After Prime Minister Shehbaz Sharif’s meeting with the IMF’s managing director in Paris, Pakistan, the IMF held two rounds of virtual talks in the last 24 hours. The talks are ongoing, and it is not yet clear whether an agreement will be reached.
The IMF has mentioned three major outstanding issues, including the budgetary framework, the external financing gap, and the market-based exchange rate. The government will have to achieve a primary surplus, jack up the FBR’s tax collection target, rationalize the non-tax revenue target, and slash expenditures in order to reach an agreement with the IMF.
The latest round of talks continued until midnight. It is still too early to say whether an agreement will be reached, but the talks are ongoing.