Pakistan to Present 2024-25 Budget Amid IMF Bailout Negotiations

The coalition government of Pakistan is set to present the budget for the fiscal year 2024-25 today, aiming to bolster its case for a new bailout deal with the International Monetary Fund (IMF). Finance Minister Muhammad Aurangzeb will unveil the financial plan, detailing proposed expenditures and funding strategies, in the National Assembly at 4 PM.

The government has outlined a tentative schedule for the budget proceedings. A general debate on the budget will commence on June 20 and continue until June 24. Members of the National Assembly will participate in the debate and vote on cut motions on June 26 and 27, with the final budget expected to be passed on June 28.

Why This Matters: The budget presentation follows the release of the Pakistan Economic Survey 2023-24, which revealed that the economy failed to meet most of its targets set in the previous budget due to challenging conditions. However, the agriculture sector achieved unprecedented growth, providing a silver lining in an otherwise difficult economic landscape.

The government, led by Prime Minister Shehbaz Sharif and Deputy PM Ishaq Dar, along with the four chief ministers and ministers of defence, finance, and planning, has approved a Rs3.792 trillion federal Public Sector Development Programme. This represents a more than 47% increase compared to the previous fiscal year, reflecting the government's commitment to development despite economic challenges.

Last-minute talks between the finance ministry and the IMF have been ongoing, with the global lender imposing stringent conditions. These include increasing the tax revenue target, withdrawing subsidies, imposing taxes on the agriculture sector, and raising levies and taxes on power, gas, and oil sectors. Additionally, the IMF demands the privatization of struggling government organizations and improvements in administrative efficiency.

Economist Sakib Sherani noted that the budget would likely align with IMF requirements but warned of the challenges ahead. "The real problem will be adherence to fiscal austerity and prudence and containment of populism," Sherani cautioned.

Ahead of the budget presentation, Prime Minister Shehbaz Sharif chaired a meeting focused on the "rightsizing of the government," as stated on the government's official X account. This initiative aims to streamline government operations and improve efficiency in line with fiscal austerity measures.

Key Takeaways:

• Pakistan to present 2024-25 budget amid IMF bailout negotiations.
• General debate on the budget scheduled from June 20 to June 24.
• Economic Survey shows unmet targets, but agriculture sector thrives.
• Rs3.792 trillion allocated for Public Sector Development Programme.
• IMF demands include tax hikes, subsidy cuts, and privatization efforts.