Tag: IMF

  • Finance Ministry responds to IMF’s concerns on budget, pledges commitment to programme

    Finance Ministry responds to IMF’s concerns on budget, pledges commitment to programme

    The International Monetary Fund (IMF) has publicly raised reservations regarding Pakistan’s budget, prompting a response from the Finance Ministry. The ministry clarified that the budget is not part of the pending ninth review, which has been delayed since November of last year. However, it emphasised its commitment to finding an amicable solution through ongoing engagement with the IMF.

    In a statement addressing the IMF’s concerns, the ministry highlighted the completion of the ninth review in early February 2023, with all technical issues promptly addressed. The only outstanding matter was external financing, which was resolved after discussions between Prime Minister Shehbaz Sharif and the IMF managing director.

    The ministry clarified that although the FY24 budget was not part of the ninth review, it shared the budget numbers with the IMF mission in line with the prime minister’s commitment. Continuous engagement with the IMF, including discussions on the budget, is ongoing.

    Addressing the IMF’s concerns about broadening the tax base, the ministry noted the addition of 1,161,000 new taxpayers by the Federal Board of Revenue (FBR) over the past 11 months. It emphasised that efforts to expand the tax base will continue, highlighting the introduction of a 0.6 per cent advance adjustable withholding tax on cash withdrawals over Rs50,000 as a significant step.

    The ministry defended the tax exemptions announced in the budget, describing them as catalysts for growth in the real sectors of the economy. It assured that the budget provides targeted subsidies for families with a PMT scorecard of up to 40, not limited to the Benazir Income Support Programme (BISP) beneficiaries.

    Regarding the amnesty measures, the ministry explained that the only change made was to “dollarize” the value of an existing provision in the IT Ordinance. It clarified that this facility has always been available and that the cap of Rs10 million ($100,000 approximately) introduced in FY2016 is being resolved based on the rupee equivalent of $100,000.

    The ministry reiterated its full commitment to the IMF programme and eagerness to at least complete the ninth review. It emphasised the government’s willingness to make difficult decisions and engage with the IMF to find an amicable solution.

  • Moody’s warns of limited loan options for Pakistan without new IMF programme

    Moody’s warns of limited loan options for Pakistan without new IMF programme

    According to a report by Moody’s Investors Service, Pakistan’s ability to secure loans from bilateral and multilateral partners will be severely limited until a new programme is negotiated with the International Monetary Fund (IMF). The report suggests that it may only become clear whether Pakistan will join another IMF programme after the elections, which are scheduled to take place by October 2023. Furthermore, even if negotiations for a new IMF programme are successful, they are expected to take some time.

    Moody’s warns that Pakistan is unlikely to access affordable market financing from sources such as Eurobonds or commercial banks in the foreseeable future. In fiscal year 2023, the government did not issue any Eurobonds and fell significantly short of its target by raising only Rs521 billion ($2.8 billion) from commercial banks, compared to the target of Rs1.4 trillion set in the fiscal year 2022-23 budget.

    The report also highlights the high external debt repayment burden for Pakistan in the coming years, with approximately $25 billion of repayments (principal and interest) due in fiscal year 2024. Additionally, Pakistan’s foreign exchange reserves are very low at $3.9 billion as of June 2.

    Moody’s further expresses uncertainty about Pakistan’s external funding prospects for fiscal year 2024 and beyond, noting that it is not guaranteed that Pakistan will secure the $2.4 billion from the IMF as budgeted. The IMF has been in talks with Pakistan regarding the ninth tranche of a $6.5 billion bailout package, with the current programme set to expire at the end of June.

    Regarding debt rescheduling, the report mentions that the government is considering rescheduling bilateral debts but has no plans to approach the Paris Club or multilateral partners for debt rescheduling. Moody’s states that a suspension of debt service obligations only to official creditors is unlikely to have direct rating implications, as it would provide the government with additional fiscal resources for essential expenditures in health, social, and infrastructure sectors.

    Moody’s criticises Pakistan’s newly announced budget for the fiscal year 2023-24, noting that it lacks significant revenue-raising or spending-containment measures to alleviate intense government liquidity pressures. The report suggests that the deficit estimates and growth projections in the budget may be overly optimistic, given the economic stresses faced by the country, including government liquidity and external vulnerability pressures, which have been exacerbated by severe floods in August 2022, expected to impact economic activity throughout fiscal year 2024.

    The budget does provide relief measures for households and businesses, including a reduction in fuel and electricity prices, an increase in the minimum wage, and a one-time cash transfer to low-income households. However, a substantial portion of the increased expenditure is allocated to salaries and pensions for government employees, with total employee-related expenses budgeted at Rs1.2 trillion, compared to an estimated spending of Rs960 billion in fiscal year 2023. The government has also earmarked Rs2.8 trillion for grants and subsidies in fiscal year 2024, compared to an estimated Rs2 trillion in fiscal year 2023.

    Pakistan’s low revenue-to-GDP ratio is identified as a major constraint on the government’s debt affordability and debt burden. The budget aims to achieve tax revenue of Rs9.2 trillion in fiscal year 2024, representing a 28 per cent increase from the estimated Rs7.2 trillion in fiscal year 2023. However, Moody’s sees significant downside risks to this revenue projection, given the lack of significant revenue-raising measures and the current economic context.

  • ‘No need to panic’: PM Shehbaz hopes Pakistan and IMF will sign deal this month

    ‘No need to panic’: PM Shehbaz hopes Pakistan and IMF will sign deal this month

    Prime Minister Shehbaz Sharif reiterated on Sunday that Pakistan has successfully fulfilled all the prerequisites set by the International Monetary Fund (IMF) to revive the halted bailout program. He expressed confidence that no obstacles remain in finalising a staff-level agreement between the nation and the IMF, emphasising that Pakistan is committed to resolving its financial challenges.

    During the inauguration of the Sabzazar Sports Complex in Lahore, Prime Minister Shehbaz hinted at a contingency plan, stating, “If there are further delays in reaching an agreement with the IMF, I will address the situation.” He urged the public not to panic, assuring them that Pakistan will be safeguarded by the divine will of Allah. He expressed hope that the government and the IMF will achieve a staff-level agreement within the current month.

    Highlighting the significance of political stability, the Prime Minister emphasised its crucial role in ensuring economic stability. He pledged to bring about economic prosperity in the country under the leadership of PML-N supremo Nawaz Sharif.

    In strong criticism of the former ruling party, Prime Minister Shehbaz held deposed Prime Minister Imran Khan responsible for the events of May 9 and vowed to bring all those involved in the violent protests and attacks on civil and military installations to justice.

  • Ishaq Dar to present Rs14.7 trillion budget for FY2023-24 today

    Ishaq Dar to present Rs14.7 trillion budget for FY2023-24 today

    Finance Minister Ishaq Dar is set to reveal the federal budget for the fiscal year 2023-24 today, with a proposed outlay of Rs14.7 trillion. The budget carries a higher consolidated budget deficit, exceeding 6 per cent of the GDP, and includes allocations for various targeted schemes aimed at attracting voters in the upcoming general elections.

    The government has established targets for tax collection by the Federal Board of Revenue (FBR) at Rs9.2 trillion, along with a non-tax revenue target of Rs2.7 trillion. To achieve the non-tax revenue target, the government plans to amend the finance bill, raising the petroleum development levy (PDL) from Rs50 per litre to Rs55-60 per litre. This adjustment aims to collect Rs870 billion in the next budget, as opposed to the revised estimate of Rs550 billion for the outgoing fiscal year.

    The credibility of the budgetary figures remains a concern as they are subject to change throughout the financial year. If a new government assumes power after the general elections, it will likely need to introduce a mini-budget to align economic realities with the International Monetary Fund (IMF) and secure a fresh bailout package.

    The government’s ability to satisfy the IMF on the revival of the stalled programme is yet to be seen. The continuing stalemate may endanger the diminishing foreign exchange reserves, with the State Bank of Pakistan’s reserves falling below $3.9 billion.

    Without establishing a comprehensive budgetary framework with the IMF, signing the staff-level agreement will be impossible. Fulfilling three conditions becomes crucial: securing external financing of $6 billion, presenting the next budget in accordance with IMF guidelines, and ensuring a market-based exchange rate.

    The IMF programme is scheduled to conclude on June 30, making any further extension unlikely, as stated by the finance minister during the launch of the Economic Survey for 2022-23. The need for a realistic budget for the next financial year is evident due to the lack of credibility surrounding the budgetary figures, which frequently undergo changes.

    The tenure of the Pakistan Democratic Movement (PDM)-led government is set to expire on August 12. However, the government has approved an allocation of Rs90 billion for the implementation of the SDGs Achievement Programme (SAP) in the next budget, compared to the revised allocation of Rs116 billion for the current financial year.

    Ensuring external debt servicing, which requires $25 billion, is the primary priority of the government in the next budget. How the government plans to generate such a substantial amount, considering it obtained just under $8.1 billion in the first ten months of the current fiscal year out of the total budgeted figure of $22.8 billion for external loans and grants, remains to be seen.

    The fiscal constraints present significant challenges, as the total net revenue receipts of the federal government are insufficient to meet debt servicing requirements. After transferring resources to provinces and accounting for non-tax revenue, the total net receipts of the federal government are expected to amount to Rs6.5 trillion.

    Meanwhile, total debt servicing will consume Rs7.5 trillion, resulting in a deficit of Rs1,000 billion for the federal government. Therefore, other expenditure categories, such as defense, salaries, pensions, civil government operations, subsidies, and grants to public sector enterprises, will have to be funded through borrowing.

    During the survey launch, the finance minister pledged the government’s commitment to increase salaries, pensions, and minimum wages for workers in the FY24 budget. To finance the substantial budget deficit in the next financial year, Pakistan will need to acquire domestic and foreign loans amounting to Rs7,000 to Rs7,500 billion.

    The challenges ahead do not have easy solutions, and addressing them will require profound structural reforms to navigate the economy out of its crisis mode.

  • Pakistan’s foreign exchange reserves dip to $3.91 billion amid IMF agreement delay

    Pakistan’s foreign exchange reserves dip to $3.91 billion amid IMF agreement delay

    In a challenging turn of events for Pakistan’s economy, the foreign exchange reserves held by the State Bank of Pakistan (SBP) have plummeted to $3.91 billion.

    The decline in reserves is primarily attributed to external debt payments, coinciding with the expiration of the country’s International Monetary Fund (IMF) program, which has been stalled for several months.

    The SBP announced on Thursday that the reserves decreased by $179 million during the week ending on June 2, leaving the country with barely enough coverage for controlled imports for just one month.

    Commercial banks, on the other hand, are holding net foreign reserves worth $5.42 billion, $1.51 billion more than the central bank. Consequently, Pakistan’s total foreign reserves stand at $9.3 billion as of June 2.

    This marks the sixth consecutive weekly drop in foreign exchange reserves for Pakistan, signaling a lack of progress in securing external financing. Political instability has played a significant role in the deteriorating economy, and the country has yet to secure much-needed funding to avert the risk of default.

    Pakistan’s $350 billion economy is currently in turmoil due to financial woes and the delay in reaching an agreement with the IMF. The pending agreement would release crucial funds that are essential for stabilizing the economy.

    The government has been engaged in discussions with the IMF since the end of January to resume a $1.1 billion loan tranche, which has been on hold since November 2022. This loan is part of a larger $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019.

    Earlier today, Finance Minister Ishaq Dar revealed that the coalition government has shared its budget numbers with the IMF, aiming to unlock the ninth review.

    He expressed confidence that there are “no issues in the numbers.” Pakistan’s government faces significant pressure from the IMF to implement stringent fiscal measures and unlock the final tranche of a vital bailout package.

    To meet the IMF’s requirements, Pakistan must eliminate subsidies in sectors such as energy, allow the rupee to float against the US dollar, increase taxes and duties, and impose import restrictions. These measures are seen as crucial steps toward stabilising the economy and securing external funding.

    The future of Pakistan’s economy hinges on successful negotiations with the IMF and the implementation of effective economic reforms.

    The government must address political instability and work towards regaining the confidence of international lenders to alleviate the financial strains on the country.

  • Countdown to Pakistan’s budget unveiling: Last IMF review holds the key

    Countdown to Pakistan’s budget unveiling: Last IMF review holds the key

    Pakistan is heading towards a crucial phase as it prepares to unveil its budget on June 9, following an arduous bailout negotiation with the International Monetary Fund (IMF). A Fund official revealed that only one board review remains under the current IMF bailout package, which is seen as a step towards a successful review.

    Esther Perez Ruiz, the resident representative for Pakistan at the IMF, emphasised the need to restore the proper functioning of the foreign exchange market to pave the way for the final review.

    Ruiz outlined additional prerequisites, including passing a budget that aligns with the program objectives for the 2023-24 fiscal year, and securing credible financing commitments to address a $6 billion shortfall.

    Experts suggest that the coalition government is striving to strike a delicate balance between satisfying the demands of the IMF and winning over voters in the upcoming general election. Analysts expect the government to announce populist measures in the budget to appease the electorate while aiming to meet IMF prescriptions.

    The IMF program, which concludes this month, has approximately $2.5 billion in funds yet to be released due to ongoing negotiations between Pakistan and the lender. Pakistan’s economy is grappling with severe challenges, including high inflation, fiscal imbalances, and low reserves.

    The government is hoping that the general election scheduled for November will help alleviate the turmoil stemming from a protest campaign led by Pakistan Tehreek-e-Insaf (PTI) chairman after his removal in a no-confidence vote last year.

    Former finance minister Miftah Ismail stressed the importance of securing IMF funding, highlighting the difficulties Pakistan would face without it. Ismail expressed confidence that the government would present a budget in line with IMF prescriptions to ensure the country’s survival in the next fiscal year.

    A staff-level agreement between Pakistan and the IMF to release $1.1 billion from a $6.5 billion package has been delayed since November, further intensifying the country’s need for funds to avert a balance of payments crisis. Experts believe that even after the current program expires, Pakistan will likely seek another bailout in the upcoming fiscal year to avoid defaulting on its debt obligations.

    Pakistan’s central bank reserves can cover imports for only about a month, underscoring the urgency of securing financial assistance. Inflation in the country, home to 220 million people, has reached a staggering 37.97 per cent in May, marking a record high for the second consecutive month and making it the highest rate in South Asia.

    The planning minister recently announced that development spending targets in the new fiscal year would be set at 1,150 billion rupees ($4.02 billion), while projecting an inflation rate of 21 per cent for the same period. With the general election looming, some analysts anticipate that the government will announce vote-winning measures, even if they have to be scaled back later.

    Pakistan’s budget unveiling tomorrow will be closely watched by the nation, as it not only sets the course for the fiscal year but also represents a crucial step in the ongoing negotiations with the IMF and the government’s efforts to regain stability and boost economic growth.

  • PM Shehbaz urges Finance Ministry to ensure strict adherence to IMF guidelines in upcoming budget

    PM Shehbaz urges Finance Ministry to ensure strict adherence to IMF guidelines in upcoming budget

    In a meeting held between Prime Minister (PM) Shehbaz Sharif and Finance Minister Ishaq Dar on Tuesday, it was emphasized that the upcoming budget, scheduled to be presented on June 9, should strictly adhere to the parameters set by the International Monetary Fund (IMF).

    PM Shehbaz Sharif has expressed his optimism about reaching an agreement with the IMF, dispelling media reports suggesting a populist budget typically seen in election years.

    An informed source, who was present during the meeting, highlighted that Pakistan cannot afford to deviate from the IMF’s prescribed principles in the budget. The PM’s resolve to adhere to these guidelines was reinforced after his recent telephonic conversation with IMF Managing Director Kristalina Georgieva. It was during this conversation that PM Shehbaz Sharif personally appealed to Georgieva to revive the stalled $6.5 billion bailout package.

    The discussion between the PM and the IMF Managing Director took place due to the finance ministry’s inability to break the deadlock over loan talks in the past four months. However, the source disclosed that PM Shehbaz Sharif expressed satisfaction after his conversation with Georgieva, leading to an agreement to share the budget details with the IMF.

    Furthermore, the IMF Managing Director indicated the possibility of a revival of the programme. This positive development prompted PM Shehbaz Sharif to inform the Turkish media during his visit to Ankara that Pakistan remains hopeful of finalising a deal with the IMF this month. He assured that Pakistan had met all the required conditions and that the upcoming budget would align with the terms and conditions set forth by the IMF.

    “We are still very hopeful that the IMF programme will materialise. Our ninth review by the IMF will match all terms and conditions, and hopefully, we’ll have some good news this month,” PM Shehbaz Sharif stated during an interview with Anadolu in Ankara, where he was present for President Recep Tayyip Erdogan’s inauguration ceremony.

    According to Geo, the PM further clarified that while some actions are typically met after the board’s approval, this time, the IMF insisted on meeting those actions before granting approval. He affirmed that Pakistan has fulfilled these requirements as specified by the IMF.

    As the budget presentation approaches, all eyes are now on the Ministry of Finance, which has been tasked with ensuring strict compliance with IMF parameters. With the PM’s renewed optimism and the positive signals received from the IMF, there is a growing sense of hope that Pakistan will be able to secure the much-needed financial support to address its economic challenges.

    It remains to be seen how the upcoming budget will reflect the government’s commitment to IMF compliance and whether it will lead to a successful conclusion of negotiations with the international financial institution.

  • PM Shehbaz confident of positive outcome in IMF loan talks

    PM Shehbaz confident of positive outcome in IMF loan talks

    Pakistan and the International Monetary Fund (IMF) are on the verge of finalising a long-awaited loan deal, according to Prime Minister Shehbaz Sharif. In an interview with Turkish news agency, the premier expressed hope that the ninth review by the IMF would align with all the terms and conditions, leading to positive news this month.

    Prime Minister Shehbaz Sharif said that Pakistan has diligently fulfilled each and every requirement set by the IMF as prior actions. The country’s commitment to meeting these obligations demonstrates its determination to address economic challenges head-on.

    However, in the event of the IMF talks falling through, the prime minister assured the nation that Pakistan possesses the resilience and fortitude to overcome any obstacles. He drew attention to the fact that the people of Pakistan have faced and triumphed over numerous challenges in the past. If necessary, they are prepared to tighten their belts and rise once again. Shehbaz Sharif credited the government’s ability to navigate these difficulties to the unwavering support of the Pakistani people and the assistance of brotherly and friendly nations.

    Highlighting the close bilateral relations between Pakistan and Turkiye, the prime minister described them as “one soul, two hearts that beat together.” He took the opportunity to congratulate the people of Turkiye on President Erdogan’s re-election, considering it a “wonderful development.” The deep bond between the two nations sets the stage for enhanced cooperation in the near future.

    PM Shehbaz Sharif outlined plans for Pakistan and Turkiye to strengthen their collaboration, particularly in the areas of biogas, solar energy, and hydropower. By focusing on these sectors, both countries aim to bolster trade and achieve mutual growth. The emphasis on renewable energy sources aligns with the global trend towards sustainable development and underscores the commitment of Pakistan and Turkiye to fostering a greener future.

    As Pakistan and the IMF move closer to finalising the loan deal, there is renewed hope for the country’s economic stability and growth. The government’s determination to meet the IMF’s requirements and the unwavering support of the Pakistani people serve as strong foundations for overcoming challenges and securing a brighter future. Furthermore, the prospects for increased cooperation with Turkiye in key sectors pave the way for mutually beneficial partnerships and contribute to regional progress.

    With anticipation building, all eyes are now on the impending announcement that will mark a significant milestone in Pakistan’s economic journey. The successful conclusion of the loan deal will not only provide much-needed financial assistance but also serve as a testament to Pakistan’s commitment to reform and progress.

  • Minister of State for Finance and Revenue criticises IMF for interfering in Pakistan’s internal affairs

    Minister of State for Finance and Revenue criticises IMF for interfering in Pakistan’s internal affairs

    In a strong rebuke to the International Monetary Fund (IMF), State Minister for Finance and Revenue Aisha Ghaus Pasha criticised the international lender for what she called “intervening” in Pakistan’s internal affairs.

    Speaking on Wednesday, the state minister asserted that Pakistan’s actions were within the boundaries of the law, dismissing the statement made by IMF Mission Chief for Pakistan, Nathan Porter, as “extraordinary.”

    While the IMF typically refrains from commenting on domestic politics, Porter had expressed the hope that Pakistan would find a peaceful way forward in line with the Constitution and the rule of law. The state minister expressed her dissatisfaction with the IMF’s involvement in Pakistan’s political situation, emphasising that the delay in reaching a staff-level agreement was detrimental to both Pakistan and the Fund.

    Dr Pasha confirmed reports that Prime Minister Shehbaz Sharif had reached out to IMF Managing Director Kristalina Georgieva. In their conversation, the prime minister assured the IMF chief that Pakistan would fulfill all its obligations.

    On May 27, Prime Minister Shehbaz had contacted Georgieva, requesting her assistance in revitalising the stalled $6.5 billion facility. It is believed that the prime minister urged her intervention to facilitate the completion of the pending ninth review, which would unlock $1.1 billion in financing for the cash-strapped nation.

    Negotiations between the coalition government and the IMF have been ongoing since November to revive Pakistan’s bailout program, with the financing gap being a major hurdle. Approximately $2.7 billion remains to be disbursed from the $6.5 billion program, which is set to expire next month.

    Responding to a question regarding Pakistan’s contingency plan if it fails to convince the IMF before the program’s expiry on June 30, the state minister stated that while there is always a “Plan B,” the Ministry of Finance’s priority is to revive the IMF program.

    With the federal budget announcement scheduled for June 9, both sides are hopeful of reaching a staff-level agreement before then. The successful conclusion of the agreement would provide a much-needed boost to Pakistan’s economy and help address its financial challenges.

    As the negotiations continue, the Pakistani government remains committed to meeting its obligations and finding a way forward to revive the IMF program, while asserting its sovereignty and independence in internal affairs.

  • IMF’s conditions for agreement: Pakistan must arrange foreign loans and restore foreign exchange market

    IMF’s conditions for agreement: Pakistan must arrange foreign loans and restore foreign exchange market

    In a recent development, the International Monetary Fund (IMF) has urged Pakistan to address its political disputes in accordance with the constitution. This statement came after Prime Minister Shehbaz Sharif reached out to IMF Managing Director Kristalina Georgieva in a last-ditch effort to revive the derailed $6.5 billion bailout package and avoid default.

    Following the conversation between Shehbaz and Georgieva, IMF Mission Chief to Pakistan Nathan Porter made an unusual statement, expanding the IMF’s focus to the political arena.

    While the IMF typically refrains from commenting on domestic politics, Porter emphasised the importance of finding a peaceful way forward in line with the constitution and the rule of law. This statement comes in the midst of an ongoing crackdown against PTI workers, abductions of individuals, and other political issues.

    Responding to questions from The Express Tribune, Porter outlined the conditions Pakistan must fulfill to reach an agreement with the IMF. These conditions include arranging foreign loans, approving a new budget in line with the IMF framework, and restoring proper functioning to the foreign exchange market.

    Prime Minister Shehbaz sees the IMF as the last resort to avoid default and thus decided to intervene. Following the conversation with the IMF chief, he instructed the finance ministry to share details of the next budget with the IMF.

    Meanwhile, Finance Minister Ishaq Dar criticised the IMF again, stating that it would be biased and shameful if the 9th review did not take place. However, a top finance ministry official confirmed that the prime minister had contacted the IMF managing director to break the deadlock.

    Time is running out for Pakistan, as there is only one month left before the program expires. Pakistani authorities still believe that the IMF can shorten the review completion period by calling a board meeting within two weeks of announcing the staff-level agreement.

    Porter emphasised that sustaining strong policies, obtaining sufficient financing from partners, and engaging in ongoing reforms are crucial for Pakistan to maintain macroeconomic stability. He also stressed the importance of strengthening domestic revenue mobilization, eliminating state-owned enterprise losses, reducing inefficiencies, and allowing for increased social and development spending.

    While Pakistan claims to have fulfilled all the conditions agreed upon in February, the sources indicate that Pakistan is currently not meeting all three conditions set by the IMF. The value of the rupee in the open market is significantly different from its value in the interbank market, and the new budget is not aligned with the IMF’s requirements.

    To bridge the financing gap until June this year, the IMF had asked Pakistan to arrange $6 billion in fresh loans. So far, Pakistan has obtained assurances for $3 billion from Saudi Arabia and the United Arab Emirates. The government is ready to share the details of the budget and the foreign exchange policy with the IMF.

    The $6.5 billion bailout package has been derailed since November last year and is set to expire on June 30. Of the total amount, the IMF has not disbursed $2.6 billion, including a $1.2 billion tranche linked to the completion of the 9th review. Pakistan’s foreign exchange reserves stand at $4.1 billion, which is not sufficient to cover the upcoming $25 billion in repayments.

    There are still differences of opinion regarding the current account deficit for this fiscal year. The government’s revised estimate of around $4 billion to $4.5 billion has not yet been accepted by the IMF.

    Initial reports suggest that the government intends to announce an expansionary budget of around Rs14.6 trillion with a deficit of around 7.4 per cent of the gross domestic product (GDP). However, this budget would need to be adjusted to align with the IMF’s requirements.

    The IMF’s Fiscal Monitor report projected a budget deficit as high as 8.3 per cent of the GDP for the next fiscal year, significantly higher than the government’s proposal. The finance ministry had initially proposed an overall budget deficit of around 6.9 per cent of the GDP or Rs7.3 trillion.