KARACHI: Pakistan's government will hope to find a balance between reforms to satisfy the International Monetary Fund and measures to win over voters in an imminent election in its budget for the 2023-24 fiscal year to be announced on Friday, analysts said.
Pakistan's IMF program runs out this month with about $2.5 billion in funds yet to be released as it struggles to strike an agreement with the lender, as it grapples with record inflation, fiscal imbalances, and low reserves.
A general election is due by November, which the government will be hoping will end turmoil arising from a protest campaign former premier Imran Khan has led since he was ousted in a no-confidence vote last year.
Former finance minister Miftah Ismail said it was essential for the government to secure IMF funding so there was little chance of an expansionary budget.
"Without the IMF, it would be very difficult for Pakistan to survive the next fiscal year, so I’m sure the government will come up with a budget that is more or less in line with IMF prescriptions," Ismail said.
A staff-level IMF agreement to release $1.1 billion of a $6.5 billion package has been delayed since November.
The funds are crucial for Pakistan to avert a balance of payments crisis, and most analysts believe that even after the expiry of the current program, Pakistan will have to seek a bailout in the upcoming fiscal to avert defaulting on debt obligations.
Central bank reserves can cover imports for about a month.
Inflation surged to 37.97% in the country of 220 million people in May, a record for the second consecutive month and the highest rate in South Asia.
On Tuesday, the planning minister announced that budget targets for development spending would be 1,150 billion rupees ($4.02 billion) in the new fiscal year, while inflation for the year is projected at 21%.
With the general election looming, some analysts believe the government will announce vote-winning measures on Friday, even if the promises have to be scaled back later.
Fahad Rauf, head of research at the Karachi-based brokerage Ismail Iqbal Securities, said he expected a pay rise for government employees and a package for the agriculture sector, with more of a burden being piled on an already narrow tax base, and few if any, meaningful steps to broaden it.
"Banks and taxed industries will continue to feel the heat," Rauf said, adding that he thought a so-called super tax of 10% on more than 15 sectors would be levied again, even though the government said last year it was a one-off payment.
A year ago, the government set a total expenditure target at 9.5 trillion rupees for the 2022/23 year from 8.49 trillion rupees the year plans had to be scaled back after IMF discontent.
Rauf said he expected a repeat of that this year.
Independent economist Sakib Sherani said he too believed the budget would be full of populist pre-election measures that would be unlikely to survive the July-September quarter, given the necessity of more IMF support.
Pakistani budget caught between IMF expectations and election
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Pakistani budget caught between IMF expectations and election
- IMF program for South Asian country runs out this month with about $2.5 billion in funds yet to be released
- IMF funds are crucial for Pakistan to avert a balance of payments crisis and avoid defaulting on debt obligations
Pakistan, other Muslim states raise alarm over Gaza situation after heavy flooding
- Cold winter rains have repeatedly lashed the sprawling tent cities, turning Gaza’s dirt roads into mud and causing damaged buildings to collapse
- The situation has been compounded by lack of sufficient humanitarian access, acute shortages of essential life-saving supplies and materials
ISLAMABAD: Foreign ministers of Pakistan, Saudi Arabia and other Muslim nations on Friday voiced concern over the situation in Gaza, following severe flooding triggered by heavy rains in the territory.
As 2026 begins, the shaky 12-week-old ceasefire between Israel and Hamas has largely ended large-scale Israeli bombardment of Gaza. But Palestinians are still being killed almost daily by Israeli fire, and the humanitarian crisis shows no signs of abating.
Cold winter rains have repeatedly lashed the sprawling tent cities over past weeks, turning Gaza’s dirt roads into mud and causing buildings damaged in Israeli bombardment to collapse. UNICEF says at least six children have now died of weather-related causes.
In a joint message, foreign ministers of Pakistan, Saudi Arabia, Egypt, Indonesia, Jordan, Qatar, Türkiye, the United Arab Emirates, expressed their “deepest concern” over the situation, compounded by lack of sufficient humanitarian access, acute shortages of essential life-saving supplies, and the slow pace of the entry of essential materials required for the rehabilitation of basic services.
“The ministers highlighted that the severe weather has laid bare the fragility of existing humanitarian conditions, particularly for almost 1.9 million people and displaced families living in inadequate shelters,” the Pakistani foreign ministry said in a joint statement.
“Flooded camps, damaged tents, the collapse of damaged buildings, and exposure to cold temperatures coupled with malnutrition, have significantly heightened risks to civilian lives, including due to disease outbreaks, especially among children, women, the elderly, and individuals with medical vulnerabilities.”
The statement came a day after UNICEF said a 7-year-old, Ata Mai, had drowned Saturday in severe flooding that engulfed his tent camp in Gaza City. Mai had been living with his younger siblings and family in a camp of around 40 tents.
They lost their mother earlier in the war, according to the UN agency.
Video from Civil Defense teams, shown on Al Jazeera, showed rescue workers trying to get Mai’s body out of what appeared to be a pit filled with muddy water surrounded by wreckage of bombed buildings. The men waded into the water, pulling at the boy’s ankle, the only part of his body visible. Later, the body is shown wrapped in a muddy cloth being loaded into an ambulance.
Foreign minister of Pakistan, Saudi Arabia and other states appreciated the efforts of all United Nations (UN) organizations and agencies as well as non-government organizations (NGOs) in continuing to assist Palestinian civilians and deliver humanitarian assistance under extremely difficult and complex circumstances.
“They demanded that Israel ensure the UN and international NGOs are able to operate in Gaza and the West Bank in a sustained, predictable, and unrestricted manner, given their integral role in the humanitarian response in the Strip. Any attempt to impede their ability to operate is unacceptable,” the statement read.
The foreign ministers reaffirmed support to President Donald Trump’s plan for Gaza, with a view to ensuring the sustainability of the ceasefire, bringing an end to the war in Gaza, to secure a dignified life for the Palestinian people who have endured prolonged humanitarian suffering, and leading to a credible pathway to Palestinian self-determination and statehood.
“In this context, they stressed the urgent need to immediately initiate and scale up early recovery efforts, including the provision of durable and dignified shelter to protect the population from the severe winter conditions,” the statement read further.
“The ministers called on the international community to uphold its legal and moral responsibilities and to pressure Israel, as the occupying power, to immediately lift constraints on the entry and distribution of essential supplies including tents, shelter materials, medical assistance, clean water, fuel, and sanitation support.”
