ISLAMABAD: Pakistan’s coalition government is expected to lay out ambitious fiscal targets in 2024-2025 (July-June) budget on Wednesday that will help strengthen its case for new bailout deal with International Monetary Fund, officials and analysts said.

Pakistan is in talks with IMF for loan estimated to be anything between $ 6 billion to $ 8 billion to avert default for an economy that is growing at slowest pace in region.“Budget holds critical significance for Pakistan’s IMF programme and must close gap between our revenue collection and total expenditure; it is thus likely be contractionary,” said Ali Hasanain, head of economics department at Lahore University of Management Sciences.Pakistan narrowly averted default last summer thanks to short-term IMF bailout of $ 3 billion over nine months.Standard Chartered said in note on budget last month that fully implementing all measures that IMF is likely prescribing, such as increasing revenue through widening tax base and power tariff hikes, will be tough for Sharif’s government.Mustafa Pasha, chief investment officer at Lakson Investments, said he believes taking such steps would be difficult.

“Any attempt to tax agriculture, retail and real estate will likely be poorly structured and face legal challenges which will prevent any collection,” he said, although he added that failure to address IMF demands would likely lead to delay in new programme which Pakistan cannot afford for long.