FinMin hopes upcoming extended IMF programme will be Pakistan’s last

ISLAMABAD: Finance Minister Muhammad Aurangzeb announced today that the current pursuit of an extended and larger International Monetary Fund (IMF) programme might be Pakistan’s last from the global lender.

Speaking during a session on the Fiscal Year 2025 budget, Aurangzeb expressed confidence that this programme would set Pakistan on a sustainable path to development.

On June 30, 2024, Pakistan secured a $3 billion Staff Level Agreement (SLA) with the IMF. This nine-month Stand-By Arrangement (SBA) provided a crucial policy anchor for the country, aiding in overcoming several economic challenges.

However, to achieve full economic stabilization and operate within a secure economic framework, the government is striving to secure an extended programme worth approximately $6 to $8 billion.

Efforts to secure this extended programme have intensified, especially evident in the newly released FY25 budget. The government unveiled a tax-heavy budget on June 12, introducing higher taxes on the salaried class, increased levies, enhanced Federal Excise Duty (FED), and revised various tax rates and their calculations. The budget aims to reduce the fiscal deficit through enhanced revenue measures.

The FY25 budget targets a tax revenue of Rs12.97 trillion, representing a 40.2 per cent increase compared to the revised estimates of Rs9.252 trillion for FY24. Non-tax revenue is projected at Rs4.845 trillion, marking a 64.4 per cent increase from FY24.

Several reputable agencies have expressed optimism regarding Pakistan’s prospects for securing an IMF deal. However, Fitch Ratings cautioned that it is uncertain whether the fiscal targets will be met. “Even with partial implementation of the budget, we forecast the fiscal deficit will narrow,” Fitch noted. Moody’s Ratings also suggested that the budget would likely support Pakistan’s ongoing negotiations with the IMF.

The necessity for this programme stems from the urgent need to boost foreign exchange reserves and retain the confidence of other bilateral and multilateral partners to meet external financing requirements.

During his address to the National Assembly, Finance Minister Aurangzeb conveyed optimism that this would be Pakistan’s last IMF programme. He expressed confidence that this programme would balance and secure the country’s economic trajectory, paving the way for sustainable development.

Aurangzeb’s remarks concluded the Federal Budget 2024-25 discussions in the National Assembly.

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