Ahead of crucial talks, IMF spots Rs 2 trillion breach in Pakistan's budgetary estimates

Ahead of its crucial talks with the cashstrapped Pakistan government the IMF has found an over Rs 2000 billion breach in budgetary estimates for 202223 in its initial assessment that might result in escalating the budget deficit and primary deficit targets with a massive marginPakistan and the International Monetary Fund IMF officials are scheduled to kickstart parleys from Tuesday for accomplishing the ninth review under the Extended Fund Facility during which the fiscal slippages and reconciliation of figures will be the major topic of discussionAlso readPak rupeersquos fall slows as PM Sharif hopes for IMF fundsThe review would lead to the release of the next tranche of funds to Pakistan which has been pending since SeptemberThe government had envisaged a budget deficit target of 49 per cent of the gross domestic product GDP and a primary deficit to keep it at positive 02 per cent of the GDP on the eve of the budget announcement for 202223According to sources quoted by The News the IMF is currently asking Pakistani authorities to take additional taxation measures worth Rs 600 billion through a minibudgetThe sources told the newspaper that Pakistani authorities did not agree to it at all and argued that the primary deficit would not escalate up to such an extent at allThe IMF has identified a breach worth Rs 2 trillion in budgetary estimates for the fiscal year 202223 warning that the primary and budget deficits could escalate with a massive margin the report addedThe senior officials of the IMF have also taken the decision that they will incorporate a hike in circular debt of Pakistans cashbleeding energy sector beyond the agreed limit with the lender of the last resort as part of the primary deficit for the current fiscal year 202223Meanwhile Pakistan has requested the IMF for a waiver of Rs 500 billion on account of flood expenditures for calculating the budget deficit especially the primary deficit for the current fiscal year 202223ldquoThe IMF has so far calculated that the primary deficit target of 02 per cent of GDP will be breached with a massive margin with a whopping figure of over Rs 1 trillionrdquo sources were quoted as saying by the reportThe IMF further assessed that the coalition government did not recover the fuel price adjustment of Rs 65 billion for the current fiscal year The government doled out concessional electricity and gas to the exportoriented sectors which resulted in an increased requirement of Rs 110 billionPakistan is facing the worst economic crisis as its reserves have dropped to a critical level of USD 37 billion and need urgent support to avoid defaultThe IMF is the only forum that can save the country But many people wonder about the future of the country without any longterm planning in sight to tackle similar economic situationsPakistan secured a USD 6 billion IMF bailout in 2019It was topped up with another USD 11 billion in 2022 to help the country following the unprecedented floods But the IMF suspended disbursements in November due to Pakistans failure to make more progress on fiscal consolidation amidst political turmoil in the countryMeanwhile Dawn newspaper in its editorial on Saturday said that while it is crucial to seek immediate IMF funding to shore up its reserves the government shouldnt focus only on shortterm reliefThe current loan package is set to end on June 30 and if theres no new snag we will get up to USD 3 billion in funding from the lender This may take care of our immediate balanceofpayments needs but will not be sufficient to cope with a similar payments crisis the next fiscal year and beyond It is therefore advisable that the government seek to increase the size of IMF funding and the programme and extend its duration the editorial saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever