KARACHI: Government will hope to find balance between reforms to satisfy International Monetary Fund and measures to win over voters in an imminent election in its budget for 2023-24 fiscal year to be announced on Friday, analysts said.

Pakistan’s IMF programme runs out this month with about $ 2.5 billion in funds yet to be released as it struggles to strike an agreement with lender, as it grapples with record inflation, fiscal imbalances and low reserves.

Former Finance Minister Miftah Ismail said it was essential for government to secure IMF funding so there was little chance of an expansionary budget. “Without IMF, it would be very difficult for Pakistan to survive next fiscal year, so I’m sure government will come up with budget that is more or less in line with IMF prescriptions,” Ismail said.

Staff-level IMF agreement to release $ 1.1 billion of $ 6.5 billion package has been delayed since November. Funds are crucial for Pakistan to avert balance of payments crisis and most analysts believe that even after expiry of current programme, Pakistan will have to seek bailout in upcoming fiscal to avert defaulting on debt obligations.

Fahad Rauf, head of research at Karachi-based brokerage Ismail Iqbal Securities said he expected pay rise for government employees and package for agriculture sector, with more of burden being piled on an already narrow tax base and few, if any, meaningful steps to broaden it.

“Banks and taxed industries will continue to feel heat,” Rauf said, adding that he thought so-called super tax of 10 percent on more than 15 sectors would be levied again, even though government said last year it was one-off payment.

Published in The Daily National Courier, June, 08 2023

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