ISLAMABAD: The International Monetary Fund (IMF) has called on Pakistan to revise its budget framework for the upcoming fiscal year before obtaining parliamentary approval, as a precondition for entering into a staff-level agreement.
The approval of the annual budget, which involves adjustments to the Federal Board of Revenue’s (FBR) tax targets and potential reduction in exchequer costs, hinges on the agreement on the budget framework between Pakistan and the IMF.
During a video conference between Washington and Islamabad, a senior official familiar with the ongoing negotiations revealed that Pakistan has shared revised budget estimates for the next fiscal year with the IMF. However, a comprehensive agreement has yet to be reached, causing a delay in the Finance Minister’s closing speech, originally scheduled for Friday. It is now expected to be delivered on Saturday or Monday.
According to sources within the government, the recent virtual talks held on Thursday and Friday nights involved lengthy discussions between Pakistan and the IMF, during which Islamabad presented a revised budget framework. However, by midnight on Friday, a broader agreement had not been reached.
Following a meeting between Prime Minister Shehbaz Sharif and the Managing Director of the IMF in Paris, Pakistan and the IMF engaged in two rounds of virtual talks within the past 24 hours, aiming to make significant progress towards a staff-level agreement.
An official, when approached for comment, stated that intensive negotiations have been ongoing for the past 24 hours, raising hopes for positive outcomes. However, it is premature to draw any definitive conclusions at this time.
The hours-long virtual talks between Pakistan and the IMF may yield positive results, signaling progress towards a staff-level agreement.
The current IMF Extended Fund Facility, valued at $6.7 billion, is set to expire on June 30, 2023.
The IMF has identified three primary concerns, including the failure to increase taxes in the budget framework, the persistence of tax expenditures and amnesty schemes, and the need to address the economic deficit and stabilize exchange rates based on third-party markets.