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04 March 2024

Pakistan to present austerity-centred budget following IMF deal

Photo: AP


Pakistan Prime Minister Imran Khan's government was set to present an austerity-focused budget Tuesday, weeks after the country reached an agreement with the International Monetary Fund for a $6 billion bailout.

The presentation of Khan's first budget comes just a day after the government released the latest round of bleak economic figures for the cash-strapped country, showing growth for the current fiscal year falling to 3.3 percent - well below the 6.2 percent target.

The release of the figures comes as discontent simmers in Pakistan following repeated devaluations of the rupee, soaring inflation, and increasing utility costs.

The economic pain follows months of failed efforts by Khan's administration to stave off ballooning fiscal and balance of payments deficits, along with low tax yields and mounting debt.

"Prime Minister Imran Khan has committed to... trying to correct things permanently even if we go through hard times for six months or one year or one and a half years," said the country's finance advisor, Abdul Hafeez Sheikh, late Monday.

Earlier Monday, Khan took to the country's airways for the second time in recent weeks to plead with Pakistanis to declare their assets in the latest scheme aimed at increasing tax revenues.

Pakistan has struggled for decades to collect taxes with estimates suggesting that only around one percent of the 200-million strong population filed a return in 2018.

The agreement eked out with the IMF still needs final approval by the fund's board, and it is widely believed the body is waiting for the presentation of the budget before giving the final sign-off.

Analysts have warned the IMF deal would likely come with myriad restrictions that could bridle Khan's grand promises to build an Islamic welfare state, as the country is forced to tighten its purse strings.