IMF Ties Next Bailout Package to Pakistan’s Upcoming Budget Approval

 IMF Ties Next Bailout Package to Pakistan’s Upcoming Budget Approval

ISLAMABAD: The visiting IMF team has informed Pakistani authorities that the next bailout package under the Extended Fund Facility (EFF) will be considered only after the presentation and approval of an aligned upcoming budget. This arrangement could pave the way for formal negotiations and a staff-level agreement on a new bailout package, potentially augmented with climate finance ranging from $6 to $8 billion, likely in July 2024.

In the 2024-25 budget, the government must demonstrate its ability to increase FBR revenue, achieve a primary surplus by curtailing expenditures, and implement structural reforms to reduce State-Owned Enterprises (SOEs) losses. Additionally, the government will need to raise electricity and gas tariffs in July and August 2024 to secure the IMF deal, according to top official sources.

On Tuesday night in Islamabad, the Ministry of Finance hosted a dinner for the visiting IMF team, led by Nathan Porter, where ongoing discussions were expected to conclude. The upcoming budget for 2024-25 will be a crucial test for the government to prove its capability to meet the IMF’s stringent conditions.

The IMF team has gathered relevant data on major economic fronts and communicated to the authorities the type of budget the Fund expects to see in 2024-25.

Also read: FDI in Pakistan Surges 172% Year-on-Year in April 2024

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