Discussions between Pakistan’s economic team and the International Monetary Fund (IMF) Mission this week are likely to conclude without a staff-level agreement, according to sources in the Finance Ministry as reported by NetMag.
Policy-level talks thus far have not yielded definitive results, with the IMF mission, headed by Nathan Porter, set to depart Pakistan after a three-day visit. Negotiations for the new bailout program will persist virtually in the weeks ahead.
Upon concluding its current visit, the IMF Mission will issue a report on Pakistan’s overall economic situation, including a review of proposed budgetary measures for the next fiscal year, with the final decision on a new program contingent upon the budget.
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It is anticipated that a staff-level agreement with the IMF will materialize following the passage of the federal budget for the next fiscal year.
Projected Interest Payments of Rs. 9.7 Trillion in the Next Fiscal Year During the ongoing policy-level discussions, Pakistan has presented its macroeconomic framework to the IMF.
The IMF envisages a GDP growth rate of 3.5 percent for the next fiscal year, slightly lower than the Finance Ministry’s target of 3.7 percent. Discrepancies also exist in inflation estimates, with the IMF forecasting a rate of 12.7 percent compared to the Finance Ministry’s projection of 11.8 percent.
Sector-specific growth targets were delineated, with the agriculture sector expected to grow by 3.5 percent, services by 3.8 percent, and industry by 4 percent in the upcoming financial year.
Interest payments on loan repayments are projected to exceed Rs. 9,700 billion in FY25.
Exports and Remittances to Surpass $61 Billion The IMF estimates a current account deficit of $4.6 billion, slightly higher than the Finance Ministry’s target of $4.2 billion. Exports and remittances are expected to generate over $61 billion in foreign exchange earnings, with the domestic export target set at $32.7 billion for FY25.
The Finance Ministry anticipates imports totaling $58 billion, while the IMF suggests a figure of $61 billion.
Remittances are forecasted to reach $30.6 billion in the upcoming fiscal year. The fiscal deficit in FY25 is estimated at Rs. 9,600 billion. Pension Bill to Increase By Over Rs. 150 Billion The Finance Ministry has proposed allocating Rs. 1,000 billion for federal development projects, contrary to the IMF’s target of reducing development funding next fiscal year.
Additionally, the Ministry aims to generate an additional Rs. 1,300 billion in tax revenue in FY25, placing pressure on the Federal Board of Revenue (FBR) to collect Rs. 12,400 billion in taxes next fiscal year.
The pension bill is also expected to rise from Rs. 801 billion to Rs. 960 billion, according to sources.
Discussions will continue virtually following the departure of the IMF mission on Friday. A staff-level agreement appears feasible only after the approval of the federal budget next month.
