BackCash-trapped Pakistan to present FY24 budget, target fiscal deficit at 6.54%
Pakistan is likely to target fiscal deficit at 7.7% of GDP with total spending at 14.5 trillion Pakistani rupee.
PremiumCash-trapped Pakistan's government will present its annual budget on Friday needing to satisfy International Monetary Fund (IMF) conditions in order to secure the release of more bailout money.
Pakistan's economy is cracking as it faces deficits and record high inflation. Its currency has shed almost 30 per cent against the dollar over the last year, its foreign exchange reserves now cover only about one month of imports and there’s at least a $2 billion gap in external funding out of a $6 billion target set out by the IMF.
The government will target a fiscal deficit of 6.54% of GDP for the 2023-24 fiscal year, its finance minister said on Friday, a much larger shortfall than the current year's original estimate of 4.9%, reported Reuters.
The total spending at 14.5 trillion Pakistani rupees and revenue collection at 9.2 trillion Pakistani rupees, reported Reuters.
The proposals also set an inflation target of 21 per cent, well below the record high of nearly 38 per cent inflation recorded in May.
Total spending is expected to be 14.5 trillion Pakistani rupees, with 1.8 trillion rupees going to defence, reported Reuters.
The budget could target a total tax revenue of 9.2 trillion rupees and pencil in debt servicing of 7.3 trillion Pakistani rupees, reported the agency, highlighting the country's massive debt burden.
Inflation for the next fiscal year is expected to come in at 21 per cent, Reuters reported. Inflation in May was at a record high of nearly 38 per cent. Pakistan is targeting the total subsidies at 1.3 trillion Pakistani rupees, while non-tax revenue of 2.8 trillion Pakistani rupees.
Pakistan's Prime Minister Shehbaz Sharif on Friday reiterated that he was hopeful that the agreement with the IMF would go to its board for approval this month.
He added that the United Arab Emirates, Saudi Arabia and China had been ‘very helpful’ in recent months in providing funding to Pakistan.
The IMF said earlier this week that it was discussing the budget with Pakistan's government. Pakistan's government is hoping to persuade the IMF to unlock at least some of the $2.5 billion left in a $6.5 billion programme that Pakistan entered in 2019 and which expires at the end of this month.
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