Islamabad:
The International Monetary Fund (IMF) will begin virtual discussions about the next budget of Pakistan on Wednesday (today), since the visit of its mission to Islamabad has been delayed due to security concerns in the region, government sources said on Tuesday to Express PAkGazette.
Virtual conversations will take place as the global lender designated a new Mission Chief for Pakistan. According to the sources, the IMF mission delayed its scheduled arrival in Islamabad on Tuesday due to the uncertainty caused by Indian aggression, which affected air trips throughout the region.
However, the sources added that the mission is now expected to travel to Islamabad during the weekend, subject to the security situation. They emphasized that the adjustment would not negatively affect the work or schedule of the original program.
The conversations will begin on May 14 (today) and continue until May 16. “Virtual discussions are expected to be celebrated. For the second and last stretch of the conversations, the IMF team will arrive in Islamabad on Saturday and the stay until May 23,” said the source.
The IMF resident representative for Pakistan Mahir Binici did not respond to a request for comments on the change in the travel plan. The spokesman for the Ministry of Finance, Qumar Abbasi, also did not answer questions about the change in travel plans.
Meanwhile, the IMF appointed VAT Petrova, a member of the Bulgarian origin personnel, as the new Mission Chief in Pakistan. He would join the discussions together with the protruding head of Mission Nathan Porter, who served in the position for a prolonged period.
Porter was known for his firm Posture on policy issues, but was reluctant to public interactions. He also maintained strict control over the media policy of the Ministry of Finance. Mahir did not comment if the chiefs of outgoing and new mission would join both rounds of conversations.
Petrova, who has a doctorate in Economics at Michigan State University, has served as head of the IMF mission in Armenia. Previously, it had served with the missions to Israel, Iceland and Latvia.
The Pakistan government plans to present the budget for fiscal year 2025-26 on June 2, before Eidul Azha’s holidays. This will be the second budget speech of the Minister of Finance Muhammad Aurengzeb, which must be in line with the parameters that the IMF will establish during these conversations.
Fiscal policy is expected to remain close in the next fiscal year as well. The IMF has asked Pakistan to make a budget about the assumption of having 1.6% of the surplus of the primary GDP budget, which will require generating around RS2 billion beyond interest without interest.
The fiscal objective for the Federal Income Board (FBR) is proposed to be 11% of GDP or RS14.3 billion. The IMF would examine whether the government plans to take realistic credible measures to support the new fiscal objective, the sources said.
The size of the federal budget remains tentative due to the redo the defense needs and the government plans to announce less than RS18 billion budget. The general objective of the budget deficit after incorporating large provincial cash surpluses is projected by 5.1% of GDP or RS6.7 billion, they said.
According to the sources, the first day of conversations, the Ministry of Finance would advocate the IMF mission of fiscal developments during the July and March period of the current fiscal year. It will also share details of the complementary subsidies approved during the fiscal year.
The IMF has established multiple fiscal conditions, whose successful completion has so far helped to soften the continuation of the program despite the initial setbacks. Pakistan has fulfilled the objectives of the IMF for a surplus of primary budget by the federal government, as well as the collection of net income and the objectives of cash surpluses by the four provinces.
Against a primary objective of RS2.7 billion, the federal government reported a surplus of RS3.5 billion, or 2.8% of GDP. This higher surplus was mainly due to the annual reservation of the Central Bank in the first quarter, with the total estimated benefit of RS2.5 billion already counted.
The four provinces collectively generated a Cash surplus of RS1,028 billion during the first nine months, exceeding the objective of the IMF at RS25 billion. Federal units also generated RS685 billion in tax revenues, exceeding the objective of the IMF for RS79 billion. But against an income target of nine months of more than RS9.2 billion, the FBR grouped RS8.5 billion, not reaching the goal at RS715 billion.
The IMF has also asked the Government to grant an update on any savings of the government planned writing. The objective without taxes of the next fiscal year will also be discussed during the first day of the conversations, mainly the perspectives of collection of oil tax and the profits of the Central Bank.
The FBR will give an update on fiscal performance in April and the possibilities of the rest of this fiscal year. The tax deficit has been an amazing RS830 billion in the first 10 months of the fiscal year, although the government imposes additional record taxes and reduces reimbursements.
In April alone, the Government added around RS135 billion in the fiscal deficit, breaking the commitment to the IMF that the deficit against the original annual objective will not be more than RS640 billion.
The FBR has provisionally collected RS9.3 billion taxes for the end of April. However, the collection was around 27% or RS1.95 billion higher than the previous fiscal year, but it is not enough to stay on the road.
The sources said that the first day, the discussions will also take place in the so -called application measures in the track and trace areas, retail scheme and compliance risk management. The FBR has failed miserably in all these areas and its collection is largely driven by additional fiscal measures.
