IMF Hails Pakistan for Tough Measures in 2024-25 Budget

IMF Hails Pakistan for Tough Measures in 2024-25 Budget

ISLAMABAD, June 22, 2024 – The International Monetary Fund (IMF) has commended Pakistan for its stringent economic decisions embedded in the 2024-25 budget.

According to a national news agency, the IMF praised the efforts during recent virtual negotiations, marking significant progress in discussions between the two parties.

Sources indicate that the IMF expressed satisfaction with the challenging economic measures adopted in the budget, recognizing the constructive involvement of political parties in shaping these decisions. The IMF particularly appreciated the limitations on tax exemptions aimed at bolstering the economy.

The appreciation from the IMF comes as Pakistan prepares to welcome an IMF delegation for discussions on a new loan program. The delegation is expected to arrive in the last week of June, following Pakistan’s fulfillment of the IMF’s prior conditions.

Sources revealed that the IMF anticipates the approval of the budget for the next financial year by June 28 or 29. This timeline underscores the urgency and importance of the measures taken to stabilize the country’s economy.

Tough Economic Decisions

The 2024-25 budget includes several tough measures demanded by the IMF. These measures encompass:

1. Increased Tax Collection: The IMF has pushed for more robust tax collection efforts from provincial governments to enhance revenue.

2. Tax on Agriculture and Stationery Items: New taxes on agriculture and stationery items have been introduced to widen the tax base.

3. Monthly Pensions: The budget includes provisions to impose taxes on monthly pensions, a move aimed at generating additional revenue.

4. Utility Prices: There are planned increases in gas and electricity prices to reflect market rates and reduce subsidies.

5. General Sales Tax: The general sales tax (GST) is set to be raised to 18 percent, aligning with the IMF’s recommendations to standardize and increase tax revenue.

Political Consensus and Economic Stability

The IMF’s commendation highlights the positive role of political consensus in implementing these economic reforms. The collaboration between various political factions has been crucial in enacting measures that, while tough, are deemed necessary for long-term economic stability.

The successful approval and implementation of the 2024-25 budget will be pivotal for Pakistan as it seeks to secure the new loan program from the IMF. This financial assistance is expected to provide much-needed support to the country’s economy, ensuring that it can meet its fiscal challenges and maintain growth.

As Pakistan moves forward, the government’s ability to adhere to these stringent measures and the continued cooperation with the IMF will be critical in navigating the economic landscape and achieving sustainable development. The upcoming visit of the IMF delegation will be a key milestone in this ongoing effort.