ISLAMABAD: International Monetary Fund (IMF) has set stringent conditions for Pakistan’s budget next month and wants the cash-strapped country to secure parliamentary approval for them before it considers its next bailout package of $6-8 billion.
Observers believe implementing a budget dictated by the Washington-based global lender will stoke inflation and further corner PM Shehbaz Sharif’s beleaguered govt.The budget for 2024-25, to be unveiled on June 7, will become a test case for the Sharif-led regime to demonstrate it can deliver on IMF’s tough conditions.
As a fortnight-long dialogue between a visiting IMF team and Pakistani authorities comes to an end, Islamabad has agreed to finish a series of previous actions, most of which involves securing binding parliamentary approvals and legislation, within 40 days. The aim is to reach a staff level agreement (SLA) for the bailout under IMF’s Extended Fund Facility (EFF).
The IMF team has laid down what kind of budget it would like to see, officials said. “The govt will have to demonstrate its ability to raise revenues, curtail expenditure and undertake structural reforms to restrict losses of state-owned enterprises. The govt will have to hike electricity and gas tariffs in July and Aug to strike a deal with IMF,” an official source said.
Sources said the Pakistani authorities and the IMF’s staff led by the mission’s chief, Nathan Porter, had finished their work on nearly all-important economic sectors, including pensions, state-owned enterprises, reforms in gas and power sectors and monetary policy.
“The IMF wants a stamp of approval from parliament for the reform and policy actions given the unpredictable political environment in Pakistan,” a source said, adding the team will be flying out on Friday.
Observers believe implementing a budget dictated by the Washington-based global lender will stoke inflation and further corner PM Shehbaz Sharif’s beleaguered govt.The budget for 2024-25, to be unveiled on June 7, will become a test case for the Sharif-led regime to demonstrate it can deliver on IMF’s tough conditions.
As a fortnight-long dialogue between a visiting IMF team and Pakistani authorities comes to an end, Islamabad has agreed to finish a series of previous actions, most of which involves securing binding parliamentary approvals and legislation, within 40 days. The aim is to reach a staff level agreement (SLA) for the bailout under IMF’s Extended Fund Facility (EFF).
The IMF team has laid down what kind of budget it would like to see, officials said. “The govt will have to demonstrate its ability to raise revenues, curtail expenditure and undertake structural reforms to restrict losses of state-owned enterprises. The govt will have to hike electricity and gas tariffs in July and Aug to strike a deal with IMF,” an official source said.
Sources said the Pakistani authorities and the IMF’s staff led by the mission’s chief, Nathan Porter, had finished their work on nearly all-important economic sectors, including pensions, state-owned enterprises, reforms in gas and power sectors and monetary policy.
“The IMF wants a stamp of approval from parliament for the reform and policy actions given the unpredictable political environment in Pakistan,” a source said, adding the team will be flying out on Friday.