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IMF comes down hard on Pakistan’s budget proposals

  • Says draft misses opportunity to broaden tax base in progressive way
  • Criticises new tax amnesty scheme that runs against IMF programme’s conditionality/governance agenda, and creates a damaging precedent
Published June 15, 2023

The International Monetary Fund (IMF) has expressed its dissatisfaction with the budget proposals announced by Finance Minister Ishaq Dar for fiscal year 2023-24, calling them a missed opportunity to broaden the tax base while criticising the new amnesty scheme that “creates a damaging precedent”.

“The draft FY24 Budget misses an opportunity to broaden the tax base in a more progressive way,” Esther Perez Ruiz, the IMF Resident Representative for Pakistan, told Business Recorder via message on Thursday.

“The long list of new tax expenditures reduces further the fairness of the tax system and undercuts the resources needed for greater support for vulnerable (Benazir Income Support Programme) BISP recipients and development spending,” she added.

Perez Ruiz said the IMF remains engaged to discuss policies to maintain stability, and “it stands ready to work with the government in refining this budget ahead of its passage”.

Her statement comes as the IMF programme remains scheduled to end on June 30, a day before the new budget measures come into force with the start of the new fiscal year in Pakistan.

New ‘tax amnesty’

The IMF also came down hard on new taxation proposal that seeks to enhance the limit in sub-section (4) of section 111 of the Income Tax Ordinance 2001 to rupee equivalent of US$100,000.

“Enhancement of monetary limit of foreign remittance remitted from outside Pakistan from five million rupees to rupee equivalent of USD 100,000 for the purpose of section 111(4) which places bar on asking nature and source of unexplained income/assets,” it says in the ‘Salient Features’ section of the Budget 2023-24 (Income tax Ordinance 2001).

Perez Ruiz said the amnesty runs against the IMF programme’s conditionality.

“The new tax amnesty runs against program’s conditionality and governance agenda and creates a damaging precedent.”

The IMF official also said measures to address the energy sector’s liquidity pressures could be included alongside the broader budget strategy.

The remarks from the Washington-based lender come at a time when policymakers in Pakistan are scrambling to secure dollar inflows. Reserves held by the central bank have fallen below $4 billion, and look set to decrease further, while the IMF programme remains stalled at the ninth review since November last year.

Talks of debt restructuring are picking pace, and Finance Minister Dar has moved to pacify markets several times, repeating the government’s stance of meeting all obligations in a timely manner.

Just a day ago, Moody’s Investors Service warned that Pakistan is at an increased risk of a failure to restart its bailout programme with the IMF, pushing the country closer to a sovereign default.

“There are increasing risks that Pakistan may be unable to complete the IMF programme that expires at the end of June,” Grace Lim, a sovereign analyst with the ratings company in Singapore, was quoted as saying by Bloomberg on Wednesday.

“Without an IMF programme, Pakistan could default, given its very weak reserves.”


Pakistan had to satisfy the IMF on three counts, which included restoring the proper functioning of the foreign exchange market, pass a FY24 budget consistent with programme objectives, and secure firm and credible financing commitments to close the $6-billion financing gap ahead of the Board meeting.

Pakistan did not feature on the IMF Executive Board calendar as of Thursday morning.

Perez Ruiz had earlier already stated that there was only time for one last IMF board review before the scheduled end of the $6.5-billion Extended Fund Facility (EFF).

In August 2022, the IMF Board completed the combined seventh and eighth reviews of the Extended Arrangement under the EFF, taking total disbursement for budget support to about $3.9 billion. The EFF had originally been approved in July 2019.

Bilal Memon

Bilal Memon is the Head of Digital Content at Business Recorder. His Twitter handle is @bilalahmadmemon


1000 characters
Ash Chak Jun 15, 2023 04:37am
Pakistan is getting ready to default Its only a meter of time.Any sane person can see that. Dar and his cronies are spending the remaining days that they have in Pakistan to move their assets abroad or to squeeze maximum profits while they are the ones running things.
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Tariq Jun 15, 2023 05:36am
Pakistanis should not hold their breath. No one is going to bail out Pakistan now or ever
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Tulukan Mairandi Jun 15, 2023 06:23am
The IMF bailout is dead. I told this starting 4 months ago. But the naysayers called me an indian agent. I'll write a similar comment when we default very soon.
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Abdullah Jun 15, 2023 08:14am
Imf should force pakistan to tax the rich and digatalise economy so people habe to pay tax and ask the govt to privatise govt departments like how dubai did.
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Ashfaq Jun 15, 2023 08:58am
Thanks imf for not giving these crooks any money
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KU Jun 15, 2023 09:07am
What a farce. The old circus acts of our leaders are apparently not working, meanwhile they are taking us towards the point of no return and pain. But, it makes sense because they are too busy in undemocratic acts to prolong their rule.
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Tulukan Mairandi Jun 15, 2023 09:07am
As i have said. IMF deal is busted
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Tulukan Mairandi Jun 15, 2023 09:08am
IMF deal is busted. Remember, friendly countries will only loan if IMF deal comes through. Now default is inevitable
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Adnan Jun 15, 2023 09:44am
Default will result in debt restructuring so it may be the best option. This level of debt repayments are slowly crushing the country anyways.
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Omer Jun 15, 2023 10:12am
@Tulukan Mairandi, bloody indian agent
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Azam Qayum Mian Jun 15, 2023 10:37am
He is a KASHMIRI. Who don't let anybody know if they are Pro INDIA or PAKISTAN . SIKHS ruled JAMMU KASHMIR from 1813-1947. DAR- The minister of Finance in DURANI's rule played major role in establishing Sikh rule in JAMMU- KASHMIR ,in 1813 They were happy under Sikh & Hindu rule. Opted to side India during 1947 partition.
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Azam Qayum Mian Jun 15, 2023 10:38am
Good budget from PDM angle
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Ali Jun 15, 2023 11:35am
@Tulukan Mairandi, Aaameeen. We need to fall several times and must learn to get up on our own each time.
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Tulukkan Mairandi(Salem) Jun 15, 2023 11:35am
Dar and Shabaz should stop fooling Pakistani people about the SUCCESSFUL IMF DEAL before JUNE 30
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Maqbool Jun 15, 2023 11:57am
@Azam Qayum Mian, good budget from PMD angle or Modi angle ???
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Rizwan Jun 15, 2023 12:14pm
This was written an the wall. This was a complete unrealistic budget present by our so called economist or we should call him an accountant.
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Truthisbitter813 Jun 15, 2023 12:47pm
IMF playing the stooge that it is. Typical.
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Jhany Waalker Jun 15, 2023 01:45pm
FATF members please note laundry recommissioned by Dar Baba and eighty five hard core thieves (many more in junior category). Default; Freezing of FX accounts; Local banks go bankrupt; Peoples savings wiped out; Rampant inflation; Hunger; Unemployment; and etc etc etc. The UK national Dar and his mentor (the nihari lover) are safely ensconced in their palatial abodes in UK and other Western countries. A scenario that could unfold !!!!!
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Pakistani1 Jun 15, 2023 02:11pm
Pakistan rulers focus on making life more comfortable for themselves and their cronies. IMF focuses on achieving agenda of the current World rulers. Ordinary citizens pay the priced.
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Anees Rehman Jun 16, 2023 10:04am
@Ash Chak, middle and lower middle class is completely crushed. Its become impossible to meet the ends. In last 1.5 years price of everything went sky rocket. And our Finance mister claims that i have saved country from default. If this is not default then what it. Ishaaq daar formula of savings country from default is just crushed general Public. Meanwhile salaries of govt employees increase to massive 35%. Isn't it ridiculous?
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Imran Malik Jun 16, 2023 01:23pm
Why should Third World bend all the time. Why not 1st World stop printing huge amount of notes to fuel Inflation. It becomes double whammy for poor nation.
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Imran Malik Jun 16, 2023 01:30pm
First World Banks are largest launderer of Money. City Bank, HSBC, Credit Suisse, and many others. The Govt. seems to like them if you go into details. Central London is filled with Mafia Money. Why we are the one, IMF has problem just on 100000 USD incoming USD.
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