Pakistan's Parliament Approves Revised Budget to Secure IMF Deal and Tackle Economic Crisis
Pakistan's parliament approves a revised budget to secure an IMF deal and address the economic crisis. Learn how the government's measures aim to unlock vital funds and stabilize the country's financial situation.
In a significant move to tackle the ongoing economic crisis, Pakistan's parliament has given the green light to a revised budget aimed at securing a vital deal with the International Monetary Fund (IMF). The approval comes as a last-ditch effort to unlock additional bailout funds and stabilize the country's financial situation.
The IMF had expressed dissatisfaction with Pakistan's initial budget, highlighting the missed opportunity to expand the tax base in a more progressive manner. In response, Finance Minister Ishaq Dar introduced new taxes and expenditure cuts as part of the revised budget, which was swiftly approved by the parliament.
Raja Pervaiz Ashraf, the House Speaker, confirmed the passage of the finance bill during a live television broadcast on Sunday, signaling the government's commitment to addressing the pressing financial challenges.
With foreign currency reserves barely covering a month's worth of imports, Pakistan is currently facing a severe balance of payment crisis. Analysts warn that the situation could escalate into a debt default if the awaited IMF funds fail to materialize.
Time is of the essence as Pakistan has only five days left before the expiration of the $6.5 billion Extended Fund Facility (EFF) agreed upon in 2019, scheduled for June 30. The IMF is set to review the release of the remaining $2.5 billion to Pakistan before the deadline. The tranche has been on hold since November, heightening the urgency to secure the funds.
To address the concerns raised by the IMF regarding fiscal tightening measures, Finance Minister Dar also announced additional changes on Saturday. These include the implementation of a petroleum levy and the removal of import restrictions, which have been major points of contention in negotiations.
The revision of the budget follows a meeting between Prime Minister Shehbaz Sharif and IMF Managing Director Kristalina Georgieva during a global financing summit in Paris last week. Subsequently, marathon virtual talks took place between the two sides, indicating the government's determination to secure the much-needed IMF funds.
Pakistan's reliance on the $6.5 billion EFF, under its ninth review, highlights the nation's desperate efforts to unlock additional bilateral and multilateral financing. The IMF funds are crucial to access other financial resources and stabilize the debt-ridden country's economy.
By approving the revised budget, Pakistan's parliament has taken a decisive step toward securing the IMF deal and addressing the ongoing economic crisis. The nation's leaders are hopeful that these measures will pave the way for stability and pave the way for future growth and prosperity.