The finance ministry on Tuesday shared the details of the next budget with the International Monetary Fund (IMF) on the instructions of Prime Minister Shehbaz Sharif.
On Monday, the premier had contacted IMF Managing Director Kristalina Georgieva to revive the derailed $6.5 billion bailout package apparently in a last-ditch effort to avoid default.
In a related development, IMF Mission Chief to Pakistan Nathan Porter said his organisation was in touch with Pakistani officials for a meeting of the global lender’s board.
Sources in the finance ministry said the government was trying to reach an agreement with the IMF before the budget for the next financial year was approved.
They added that as part of these efforts, the preliminary proposals for the next budget had been shared with the IMF.
The sources said the IMF would review the proposals prepared by the government for the budget and discuss them with the finance ministry officials.
According to the sources, the documents related to the new budget shared with the global lender carried proposals for important targets, including tax collection, debt repayments, and subsidies.
It has been proposed to allocate up to Rs8 trillion for debt and interest payments in the upcoming budget.
The sources said Pakistan wanted to complete the current programme with the IMF by June 30. After that, Pakistan is also willing to negotiate for the next programme with the global lender.
Separately, Porter said the IMF was in touch with Pakistani authorities in order to pave the way for a board meeting before the financing programme expired at the end of June.
Ordinarily, a board meeting on a review of the programme would require a prior staff-level agreement, which in Pakistan’s case would unlock $1.1 billion in financing for the country as part of a $6.5 billion IMF package.
Read IMF spells out terms to unlock bailout
The staff-level agreement had been put off since November 2022.
“This engagement will focus on the restoration of foreign exchange proper market functioning, the passage of a FY24 budget consistent with programme goals, and adequate financing,” Porter added.
Finance Minister Ishaq Dar said the government would try not to overburden the people in the next budget but its hands were tied because of the IMF programme.
Speaking at a ceremony in Lahore, the minister added that whenever the country’s economy started growing, it was struck by a setback.
Dar maintained that the PML-N had turned Pakistan into the 24th best economy in the world in the past.
He added that he would like the IMF to clear its 9th review before the budget, as all the conditions for that had already been met.
The minister claimed that the country had suffered because the previous PTI government was unable to keep the promises it had made with the IMF.
Dar maintained that the country’s economy had taken a plunge in the last three years.
He continued that there were speculations about Pakistan defaulting on its external repayments since the last three months.
However, he pointed out that as Pakistan had not yet defaulted, the critics inside the country and abroad were facing disappointment.
Dar said the nation had to endure this tough time together and set the country on the right path again. (With input from our Lahore correspondent and agencies)