Image: Reuters Berita 24 English - In an effort to convince the International Monetary Fund (IMF) to release desperately-needed bailout fund...
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| Image: Reuters |
Berita 24 English - In an effort to convince the International Monetary Fund (IMF) to release desperately-needed bailout funds for the cash-strapped nation, Pakistan's government will unveil a budget for fiscal year 2022-23 on Friday that emphasises fiscal reduction.
The budget, which aims for a 5 percent increase in gross domestic product (GDP) for the fiscal year ending in June 2023, is released a day after the government's annual economic report for FY2021-22.
The South Asian nation of 220 million posted a growth rate of 5.97 percent for the fiscal year, but it is facing a balance of payments issue. Currency reserves have dropped as low as $9.2 billion, which is insufficient to cover 45 days' worth of imports, while the current account deficit is growing, the budget deficit is at historic highs, the currency is weakening, and inflation is in double digits.
The report stated, "Although the economy has recovered from the (COVID-19) epidemic, this strong growth (during the most recent fiscal year) is unsustainable and has led to financial and macroeconomic imbalances."
The IMF and Pakistani officials finished discussions last month, with the fund requesting that the objectives of the bailout programme, including budgetary austerity, be reinstated.
It is unclear when the Fund will consider approving the release of over $900 million of the latest tranche of Pakistan's 2019 $6 billion, 39-month programme.
The administration has already accomplished one of the most important stages, the elimination of costly fuel subsidies, resulting in a 40% increase in fuel costs.
Yousuf Nazar, a former emerging market expert at Citigroup, told Reuters that launching the IMF programme should be the government's highest priority.
"You are aware that this budget will set a difficult course for the next couple of years, marked by increased inflation, lesser investments, and more unemployment as the government strives to implement the IMF's programme," he stated.
