The IMF Notices An Rs2 Trillion Breakdown In Pakistan’s Financial Projections

ISLAMABAD
The International Monetary Fund (IMF) warned that the primary and budget deficits could increase by a significant margin in its initial assessment prior to the long-delayed in-person parleys. The IMF found a breach in budgetary estimates for the fiscal year 2022–23 worth Rs2 trillion (or over Rs2,000 billion). High-level talks between Pakistan and the IMF are set to begin on Tuesday, January 31, in order to complete the ninth review under the Extended Fund Facility. The main topics up for discussion will be the budgetary slippages and the reconciliation of numbers. The government had planned on keeping the primary deficit at zero and aiming for a budget deficit of 4.9% of the GDP.
Through a mini-budget, the IMF is currently requesting that Pakistani authorities implement new taxing measures of Rs600 billion. The primary deficit would not increase to such a degree, according to Pakistani authorities, who refused to accept it at all. It should be highlighted that now there are areas where both parties have differing opinions and must resolve them to move toward reaching a staff-level agreement by February 9 that has been specified. Senior IMF officials have also decided to include an increase in circular debt owed by Pakistan’s cash-strapped energy industry above the ceiling previously agreed upon with the lender of last resort as part of the primary deficit for the current fiscal year 2022–2023. In order to avoid including Rs 500 billion in flood-related expenses when calculating the budget deficit, particularly the primary deficit for the current fiscal year 2022–2023, Pakistan asked the IMF for a waiver.
The government had anticipated spending Rs3,950 billion on total debt servicing in the first budgetary estimates, but since the State Bank of Pakistan raised its policy rate, this amount may likely exceed Rs5,000 billion, causing slippages on the fiscal side.