The International Monetary Fund (IMF) has expressed concerns about the fiscal year 2023–24 (FY24) budget that the government submitted to the National Assembly last week, but it is still willing to work with Pakistan to make changes to the plan before it is approved, according to Esther Ruiz Perez, the IMF’s resident representative for Pakistan.
The IMF board will decide whether to release at least some of the $2.5 billion in pending disbursement under the 2019 Extended Fund Facility (EFF), which expires at the end of this month, after Pakistan satisfies the IMF on three counts, including the budget for the upcoming fiscal year, according to remarks made by Ruiz a day before the budget was presented.
In her most recent comments, Ruiz claimed that the government’s budget proposal for a new tax amnesty plan creates a “damaging precedent” and violates the program’s conditionality. The Fund’s objections to a specific plan were not made clear in the statement.
It also points out that the draught FY24 budget misses an opportunity to increase the tax base in a more progressive way, and the lengthy list of new tax expenditures further reduces the tax system’s fairness while depleting funds required for development spending and bolstering support for the most vulnerable BISP recipients.
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She said that actions to relieve the liquidity strains on the energy industry might be combined with the overall budget approach.
The lender only had time for one board meeting before the current program came to an end, the IMF official had earlier said.
Pakistan was anticipating receiving about $1.2 billion from the IMF in October of last year as part of the EFF’s ninth review, despite reserves being at critical levels for the preceding several months. But over 8 months later, that tranche still hasn’t arrived, according to the IMF, who claims Pakistan can’t fulfil crucial requirements.
The ninth review of the program, which is just weeks away from expiration, is still in limbo while the tenth review, which was initially planned, is all but a non-starter.
