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Pakistan

Under public and IMF’s watchful eyes, Ishaq Dar set to present federal budget shortly

  • Finance minister will be the fourth person in four years to unveil proposals
Published June 9, 2023
Design: Hussain Afzal
Design: Hussain Afzal

ISLAMABAD: Pakistan will present the federal budget for the coming fiscal year (2023-24) today, looking to balance requirements of its International Monetary Fund (IMF) programme with those of the public that is getting increasingly agitated over record inflation.

Finance Minister Ishaq Dar will become the fourth finance minister to announce the budget in four years, a time span that covers the governments of Pakistan Tehreek-e-Insaf (PTI) followed by the Pakistan Muslim League-Nawaz (PML-N)-led coalition that ousted Imran Khan through a no-confidence vote last year.

Dar, who himself took over from fellow party member Dr Miftah Ismail last year, has hinted at offering relief through increase in salaries for government employees and raising minimum wage at a time of economic distress, but his moves will be closely watched by the IMF.

The government, which has seen the IMF programme stalled since November last year, will need to satisfy the Washington-based lender to have any chance of securing the release or more bailout money. At the same time, with elections around the corner, Dar will also keep a close on PML-N’s political capital that has suffered in the face of meeting IMF conditions for programme revival.

Govt says 3.5pc growth target quite realistic

With foreign exchange reserves at a precarious level, Pakistan also faces the risk of default – Dar has ruled this out on several occasions – with the economy creaking under twin deficits and political turmoil.

The economy could also slide further as elections near.

Some key elements the markets and public are going to look at in the budget include:

  • Pakistan is likely to announce a GDP growth target of 3.5%. It announced a 0.3% growth rate for the outgoing fiscal year (2022-23)

  • Development expenditure has been proposed at Rs1,150 billion

  • Inflation target for coming fiscal year will reportedly be set at 21%. In the outgoing fiscal year, it stands at over 29% with May’s figure clocking in at a record 38%

  • The IMF wants a budget consistent with programme objectives. “The focus of discussions over the FY24 budget is to balance the need to strengthen debt sustainability prospects while creating space to increase social spending,” said Esther Perez Ruiz, the IMF’s resident representative for Pakistan, on Thursday

  • There is little space on the fiscal side to offer tax exemptions and subsidies

  • Salaried group will want to look at income tax rates for the next fiscal year after being on the losing side in 2022

  • Defence budget is of special interest among both policymakers and public

  • The markets would be closely watching whether the government increases/decreases corporate tax rates, especially Super Tax, and whether the proposed tax on corporate reserves is imposed

  • Minimum wages

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IMTIAZ CASSUM AGBOATWALA Jun 09, 2023 02:15pm
I don't think he is bothered about the public eye or the IMF s watch . He is too arrogant .
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Jani Walker Jun 09, 2023 02:29pm
A bankrupt country introducing a budget based on fudged figures. I suppose the entire world will come to a standstill while this guy Dar spews out his lies. Ha ha ha.
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Shahid Khan Jun 09, 2023 03:01pm
There's no hope whatsoever and the future seems really blank. Unfortunately
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Muhammad Arshad Jun 09, 2023 03:06pm
The regime change has ruined this country and only solution is to go abroad. What a fall for our country and those who can change it are just been controlled.
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Ashfaq Jun 09, 2023 04:29pm
Has Dar ever done good for Pakistan, IMF has put three conditions, and budget is one of them let’s see how dar makes us all cry
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Ashfaq Jun 09, 2023 04:30pm
@Shahid Khan, there is future IPP under JK for next 3 years under he is kicked out as well and then Mr dar will be back again
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Hamid Jun 09, 2023 04:43pm
Even if Pakistan gets 50b$ magically from somewhere, after 2 or 3 years we will back to square one as we are today since the direction of the country is wrong. Political uncertainty, establishment roll of throwing government out in the middle of their tenure, political & business elites evading tax & only salaried class facing the brunt of taxes, no vision of future, establishment roll of interfering in politics & economics, the list is long. Pakistan is seen as a security state and investors never comfortable in security state. Currently no hope at all as long as multiple powerhouses exist in Pakistan. Majority is ousted and minority is ruling the country for past 75years with the help of establishment & elites captured system
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Cold Method Jun 09, 2023 05:32pm
The country was bankrupt from the day one! Boots and crooks with loots will never let it go in a right direction.
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Tulukan Mairandi Jun 09, 2023 10:47pm
This is the final nail on the coffin containing the corpse of the Islamic Republic of Pakistan, the ameen and sadiq land of the muslimeens and muslimahs of the subcontinent.
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