IMF Raises Serious Objections on Pakistan’s Budget 2023-24
The federal budget for the fiscal year 2023–2024 has drawn strong criticism from the International Monetary Fund (IMF).
The Fund has also voiced opposition to the new tax amnesty that is being proposed in the budget, claiming that it violates the program’s conditionality and governance agenda and sets a dangerous precedent.
Staff members continue to debate ways to ensure stability, according to Esther Perez Ruiz, the IMF’s resident representative in Pakistan, who spoke to ProPakistani. However, the draught fiscal year 2024 Budget misses a chance to increase the tax base in a more progressive way, and the extensive list of new tax expenditures further reduces the tax system’s fairness and depletes the funds required for spending on development and providing increased support for BISP recipients who are at risk.
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“The new tax amnesty sets a dangerous precedent and conflicts with the conditionality and governance agenda of the programme. Along with the overall budget strategy, measures to relieve the liquidity concerns in the energy sector could be included. Before it is passed, the IMF staff is prepared to collaborate with the government to improve this budget, Esther continued.
The lender with a Washington office expressed their opinion as Pakistan fought to secure dollar inflows. As the IMF programme has been stalled since November of last year, the central bank’s reserves have plummeted to precarious levels and are anticipated to decline even further.
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Debt restructuring discussions are intensifying, and Finance Minister Dar has repeatedly tried to calm the markets by reiterating the government’s commitment to meeting all of its obligations on time.
Relevantly, Pakistan must meet three conditions before the IMF’s Executive Board meeting: it must get the foreign exchange market back to normal operation, adopt a budget that is in line with programme goals, and obtain reliable financing commitments to close the $6 billion financing gap.
Pakistan is not currently on the IMF Executive Board’s agenda.
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