As we navigate through the economic challenges posed by the fiscal year 2023-24, it’s critical to pay attention to the International Monetary Fund’s (IMF) concerns regarding Pakistan’s budget planning. In a recent article published on Dawn, it’s highlighted that the IMF’s criticism carries profound risks for the country’s economy.
The government’s potential failure to meet the lender’s conditions by the June 30 deadline could block much-needed funding, unless crucial amendments are made. The Finance Minister, Ishaq Dar, has voiced that Pakistan “cannot accept everything from the IMF”, yet it’s clear that the consequences of not reaching an agreement could be dire.
As per the best-case scenario, the country could find itself struggling to secure bilateral debt relief and fresh loans to meet external debt obligations of $23bn. Worse still, Pakistan risks falling into debt default, which could lead to an economic slowdown, job losses, and inflation spike.
Notably, Moody’s warns that the failure to restart the $6.7bn bailout programme with the IMF is nudging Pakistan closer to a potential default. The IMF has criticized Pakistan’s budget policies, pointing out missed opportunities to broaden the tax base and criticizing the amnesty for a money-whitening scheme through remittances.
While the government is under the scanner, it’s still a possibility to revise the budget with IMF’s assistance, ultimately helping to stabilize the nation’s fiscal conditions. However, a lack of proactive policy action could exacerbate the current economic crisis.
For a deeper dive into the current economic scenario and the role IMF could play in it, read the full article here.
Published in Dawn on June 16th, 2023, this article underscores the urgent need for Pakistan’s government to address these budgetary issues promptly and effectively.