As Pakistan accelerates towards its electoral destiny amid a persisting economic crisis, Finance Minister Ishaq Dar presented the annual budget for the financial year 2023-24 in the National Assembly last week.
The expansionary budget, amounting to approximately 14.5 trillion Pakistani rupees ($50.5 billion), allocated more than half of its funds towards servicing a debt of 7.3 trillion rupees. Considering the upcoming general election, the government has allocated approximately 950 billion rupees towards development projects aimed at securing votes. Additional measures encompass salary increments for government employees. This budget allocates the single largest expenditure after the debt crisis to defence, like every other year. The defence budget constitutes 12.5% of Pakistan’s projected total fiscal 2023-24 expenditure.
The Sharif-led coalition government took a few measures to please the farmers, such as increasing agri loans from Rs 1.8 trillion to Rs 2.25 trillion. A balance-of-payments crisis has severely impacted Pakistan’s economy as it grapples with the daunting task of managing overwhelming external debt. The situation has been further exacerbated by months of political turmoil, intensifying the challenges faced by the nation. The common people across the country are facing severe distress due to the cost of living crisis, skyrocketing inflation, a sharp decline in the value of the national currency, and the country’s inability to afford imports. The industries are pulling down shutters, and the elites are leaving their homeland. Yet, Islamabad has money for defence acquisition.
During the budget announcement, Pakistan’s Finance Minister Ishaq Dar asserted that the export goal for the country would be set at Rs 30 billion, indicating the desired value of exported goods and services. Additionally, he stated that the target for remittances, which refers to the money sent by individuals working abroad back to their home country, would be Rs 33 billion. These targets serve as benchmarks for the expected amounts to be achieved in exports and remittances, reflecting the economic aspirations and priorities of the nation.
In the Global Economic Prospects report, the World Bank stated that Pakistan’s economy is expected to grow approximately two per cent in the upcoming fiscal year. Pakistan is currently facing a situation where its bailout funds have been held back. But there are speculations about whether this budget is satisfactory to the IMF. Instead of a populist, and must ensure that its budget aligns with the IMF’s requirements and receives their approval to unlock the stalled bailout funds. Over the course of several decades, starting from 1958, Pakistan has entered into a total of 22 programs with the IMF.
However, except for the 2013-2016 package, Pakistan has not fulfilled all these programs’ requirements and conditions. The country has faced challenges meeting the prescribed targets and benchmarks, resulting in incomplete program implementation. To accommodate these difficulties, the IMF has granted Pakistan approximately 18 waivers, which can be seen as exemptions or allowances provided by the global lender.
In order to obtain additional financial assistance from global lenders, the crisis-hit nation must meet the requirements and expectations set by the IMF. A few global lenders are waiting for the IMF to help Pakistan, but the state has hardly done anything regarding structural reforms.
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