Islamabad_Minister for Finance and Revenue Ishaq Dar has said that Pakistan is currently facing geopolitical pressures on the international stage, with attempts being made to push the country towards default.

He said this while presiding over a meeting of the Senate Standing Committee on Finance. During the meeting, the minister briefed the participants regarding budget for FY2023-24 and the International Monetary Fund (IMF) programme.

The opposition is worried about why Pakistan is not defaulting. It wants Pakistan to become Sri Lanka before approaching the IMF. The last regime brought the country to the verge of collapse.

“However we cleared every payment last year. There is a shortage of capital in Pakistan. However, it has assets worth billions of dollars.

“Pakistan’s debt is $130 billion. We have to focus on paying the debts. Currency is being smuggled from Pakistan and we have launched a crackdown on it. The State Bank of Pakistan has been made more autonomous.”

He deplored the amendments made to the State Bank of Pakistan Act by the previous government and described the move as aimed at creating ‘a state within a state’.

“Geopolitics is happening against Pakistan so the country defaults,” he rued.

He added: “The government is thinking of lifting the ban on imports. By June 30, the ban on imports is expected to be lifted. We have satisfied the US with the purchase of oil from Russia. We can’t buy oil from Iran as it has been facing sanctions, however, we can get electricity from Iran.

He continued: “The budget has not been made on the dictation of the IMF. The Fund has reservations about relaxing taxes. Talks with the IMF has not been abandoned. We are holding talks on our own terms. Previous payments have been cleared. The IMF wants more taxes.

“The external financing gap is $6 billion dollars. The current account deficit as of June 30 is $4 billion.

“The IMF has promised $3 billion. Saudi Arabia will provide $2 billion and the UAE $1 while $ 1 billion dollars will come from the World Bank.”

Earlier, the IMF expressed reservations about the government’s ‘failure to broaden the tax base through the budget for the fiscal year 2023-24’

The finance minister said “Pakistan is a sovereign country and cannot accept everything from the IMF. Islamabad has the right to give some tax concessions.

“We want to give employment opportunities to the youth through development in the IT sector. The government has set a target of achieving $15 billion in IT exports in the next five years.

“The amendments made to the State Bank Act are unsustainable,” he further added.

According to the finance minister, changes were made in the SBP’s governing laws but they are not complete yet.

Reportedly, IMF said Islamabad missed an opportunity to broaden the tax base and reduce tax expenditures as well as terms of tax amnesty against the fund’s programme conditionality.

” The draft FY24 budget misses an opportunity to broaden the tax base in a more progressive way, and the long list of new tax expenditures reduces further the fairness of the tax system and undercuts the resources needed for greater support for vulnerable BISP recipients and development spending,” she said.

IMF says Pakistan’s 2024 budget a missed opportunity,

Last day,

The International Monetary Fund (IMF) on Thursday expressed dissatisfaction with Pakistan’s recently presented budget, a blow for the cash-strapped country which has only two weeks left until its bailout programme expires.

Pakistan has barely enough currency reserves to cover one month’s imports. It had hoped to have $1.1 billion of the funds released in November – but the IMF has insisted on a number of conditions before it makes any more disbursements.

With time for only one last IMF board review before the end of the $6.5 billion Extended Fund Facility (EFF), Pakistan was expected to present a budget in line with programme objectives, restore the proper functioning of the FX market, and close the $6 billion gap ahead of the board review.

“Staff remains engaged to discuss policies to maintain stability. However, the draft FY24 Budget misses an opportunity to broaden the tax base in a more progressive way,” Esther Perez Ruiz, the IMF’s resident representative for Pakistan, said in a text message to Reuters.

She added that the long list of new tax expenditures further reduces the fairness of the tax system and undercuts the resources needed for vulnerable recipients in the Benazir Income Support Programme.

“The new tax amnesty runs against program’s conditionality and governance agenda and creates a damaging precedent,” added Perez Ruiz.

She said that measures to address the energy sector’s liquidity pressures could be included alongside the broader budget strategy.

Added Perez Ruiz: “The IMF team stands ready to work with the government in refining this Budget ahead of its passage,” implying the country still has a chance to unlock its ninth IMF board review prior to the end of the EFF programme.

A Pakistan government spokesman did not immediately respond to a request for comment.